October 30, 2019
ASIC has called on superannuation trustees to raise the standard of communication to fund members about the reforms impacting the insurance arrangements of members.
The regulator issued a letter to the superannuation industry about the Putting Members’ Interests First (PMIF) reforms and ongoing communications about insurance in superannuation, with the reforms due to take effect on 1 April 2020.
The reforms involve the following changes:
- Insurance will be opt-in for members in a regulated superannuation fund with product balances below $6,000
- Insurance will be opt-in for new members under-25 years old
As a result of the PMIF reforms, by 1 December 2019 superannuation trustees are required to write to members with a balance of less than $6,000. These members must be notified that their insurance cover may cease from 1 April 2020 unless they opt-in to continue this cover.
ASIC stated it expects trustees to help their members understand the impact of the reforms on them and make good decisions by:
- Providing balanced and factual communications, that include appropriate context about the reforms
- Tailoring communications to the needs of their members
A recent review by ASIC found that many superannuation trustees did not adequately communicate with members in a similar situation when they were about to be impacted by the Protecting Your Superannuation Package (PYSP) reforms and ASIC Commissioner, Danielle Press, says the superannuation industry must learn from this.
“Communication with members about important matters…should not be dismissed as a ‘mere exercise in compliance’.”
“The PYSP communications reviewed by ASIC were not always balanced in providing members with all available options to them, including the reason why ceasing insurance might be appropriate,” said Press.
“ASIC expects trustees to follow ASIC’s guidance, based on its initial review of the PYSP communications, in designing their communications from now on. Communication with members about important matters, such as their insurance, should not be dismissed as a ‘mere exercise in compliance.’ Trustees need to act to help their members understand what the reform means for the member.”
ASIC intends to release further findings from its PYSP review work in early 2020.
Click here to read ASIC’s letter.