A royal commission's final report Monday on misconduct in Australia's financial services sector included recommended changes for the country's fast-growing superannuation industry that industry veterans described as more tweak than transformational.
Kenneth Hayne, appointed royal commissioner for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry on Dec. 14, 2017, issued a 530-page report to the government Monday that, in the section pertaining to Australia's A$2.6 trillion ($1.9 trillion) superannuation industry, included calls for:
- An end to unsolicited "hawking" of superannuation products to potential participants.
- A prohibition against super fund trustees wining and dining employers to win over employees to a fund.
- Steps to ensure employees changing jobs avoid ending up with multiple accounts by limiting to one the number of super funds into which they can be defaulted.
- Rules to mandate stronger cooperation between the superannuation industry's two regulatory bodies — the Australian Prudential Regulation Authority and the Australian Securities & Investments Commission.
Industry Super Australia, an advocacy group for 16 not-for-profit industry superannuation funds, said while the royal commission report should lead to better outcomes for consumers, it stopped short of systemic reforms — settling for "a series of changes to existing laws and stronger enforcement."
On the topic of stronger enforcement in the report, Mr. Hayne took the Australian Securities & Investments Commission to task for what he termed a "deeply entrenched culture of negotiating outcomes rather than insisting upon public denunciation of, and punishment for, wrongdoing."
He warned that raises the danger of an agency being susceptible to "capture" by those it is tasked with regulating.
James Shipton, ASIC's chairman, said in a statement Monday welcoming the royal commission's final report that the concerns the report identified "accords with ASIC's change agenda, that has included the adoption of our 'why not litigate?' enforcement stance."