It’s been a turbulent year for superannuation. Both the Productivity Com-mission and the financial services royal commission shone a light on how the $2.9 trillion system failed to identify and address the shoddy deals dished out to too many consumers.
It’s estimated there are more than a million dud default funds draining fees out of members’ accounts. But those days are numbered.
Apart from the avalanche of class actions that have followed, and will act as a deterrent, the Australian Prudential Regulatory Authority (APRA) has been given stronger enforcement powers to do something about it.
It will act against super funds that breach their obligations to members, including the duty to act in their members’ best interests. It will also enable APRA to intervene early “before members suffer significant harm”.
Around $150 billion in annual super contributions flow into the industry and for many members super will become their largest or second-largest asset. This has led the Productivity Commission and the royal commission to call on regulators to do more.
Wayne Byres, APRA’s chairman, has described its new powers as “a game-changer providing regulatory muscle that has previously been lacking”. It will enable the regulator to be proactive and weed out underperforming funds with high fees that reduce members’ retirement incomes by hundreds of thousands of dollars over their working life.
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