What the Royal Commission means for you and your super
You might be aware that the government is carrying out a Royal Commission into misconduct in banking, called the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. However, what you might not know is that the Royal Commission is also investigating misconduct in the superannuation industry.
You might be wondering, ‘what does this have to do with me?’ It might affect your super, so let’s take a closer look at the Commission and a few key things that have happened so far.
What you need to know
The Royal Commission was established on 14 December 2017. It’s led by an appointed Commissioner, the Honourable Kenneth Madison Hayne AC QC, who is a former Justice of the High Court of Australia.
The Royal Commission has examined the following things:
- Consumer lending practices
- Financial advice
- Loans to small and medium enterprises
- Issues for remote and regional Australians (including Aboriginal and Torres Strait Islander people)
Other matters discussed at the Royal Commission include suggestions of failure to put the interests of superannuation fund members above advisers and charging deceased customers for financial advice.
It’s important to note here that in the Letters Patent (an open document) setting out the terms of reference of the Royal Commission, it states that all Australians have a right to be treated honestly and fairly in their dealings with banking, superannuation and financial services providers.
But there’s no watchdog for super
The superannuation industry has compelled all working Australians to save a portion of their income now for retirement later in life. This forced saving has created a retirement savings pool of over $2 trillion.
Acting for the Royal Commission in early August 2018, Michael Hodge QC scrutinised large superannuation fund trustees, asking: “What happens when we leave these trustees alone in the dark with our money?” At present, there’s apparently no dedicated conduct regulator or watchdog to 'shine a spotlight' on the bad behaviour of superannuation trustees.
On Thursday September 6 2018, the Australian Securities & Investments Commission (ASIC) announced it was taking two National Australia Bank (NAB) companies – Nulis Nominees (Australia) Limited and MLC Nominees Pty Ltd – to the Federal Court.
ASIC alleges that these two companies charged fees to a large number of super fund members for services that were not actually provided. ASIC action claims the NAB entities made false or misleading representations that they were entitled to deduct certain fees.
Keep an eye on your super fund!
The Royal Commission is ongoing and hasn’t yet produced a final report and recommendations. However, it’s clear that every Australian with superannuation will need to closely examine the management of their superannuation by outside entities, especially when it comes to fees.
The rise of the SMSF
The idea of a self managed superannuation fund (SMSF) is likely to become more appealing to you of you object to having your retirement money managed by large public superannuation funds. The development of technology and increased efficiency in SMSFs is likely to make these funds viable for a lot more people in the near future.
If you’re interested in learning more about setting up your own SMSF and taking control of your financial future, get started with Selfmade today.