FSC and ISN Announce Truce in Super War of Words

The announcement of a truce between the retail and industry super fund sectors was one of a number of key initiatives and policy positions outlined at last week’s Financial Services Council (FSC) Annual Conference…

ISN and FSC Alliance

In his address to members, FSC CEO, John Brogden said that the former sparring partners, the FSC and Industry Super Network (ISN), were ready to put the past behind them and form an alliance. He said the two groups would work together to provide a ‘united voice’ on superannuation policy and consumer interests.

“Today, the ISN is here at our conference, to symbolise a new relationship in superannuation policy in Australia,” Mr Brogden said. “On the eve of the election, we are signalling to Canberra, that the ISN and FSC will work together in the best interests of the 11 million Australians saving for their retirement.”

However, Mr Brogden added that there would still be differences in the way the two bodies approached certain issues. ISN CEO, David Whitely, expanded on this point, saying the FSC and ISN “… should not be blind to the philosophical differences between the sectors.”

“In a market where regulation can be the determinant of market share, there will always be robust debate over certain (policy) settings,” Mr Whitely said.

“But the competition for ideas should be focused on making super better for members, whose retirement savings it is our privilege to be steward of.

… the first instinct should be to pick up the phone, rather than fire off a press release

“If you like, the first instinct of the FSC and ISN should be to pick up the phone, rather than fire off a press release.”

Among the issues likely to cause division is the positioning of financial advisers as trusted professionals.

Speaking to riskinfo after the announcement, Mr Whitely said while the ISN was very strongly opposed to the sales commission system, the Association had always been a strong advocate for financial advice.

“Our largest concern was that people who needed specific pieces of advice weren’t getting access to financial planners, or if they were, they were often being charged – via a commission system – a disproportionate amount of money for it.

“But the reforms that have come through, particularly around the provision of intra-fund advice, will massively increase the amount of advice that is given to people.

“I can assure you we’ll no doubt still disagree, but it’s a matter of how those disagreements are actually undertaken, and how resolutions are made. At the end of the day everything is eventually resolved, often through compromise, and we’ve got to try and do that.”

New Charitable Program

The Council also introduced a new, long-term partnership alliance with the First Nations Foundation, to help improve the financial literacy of Indigenous Australians.

The FSC will be providing funds and resources to the First Nations Foundation to help expand its adult financial literacy program, My Moola, for members of Indigenous communities.

The program aims to give Indigenous Australians knowledge and confidence in using money, the financial system and its products. It focuses on newly employed people, who in some cases are the first in their community to enter the workforce.  The FSC said the program also improves employee retention, and has flow-on benefits to the individual, families, and the company as staff improve their personal financial matters.

“Access to appropriate and affordable financial products and services such as a transaction account, insurance and a moderate amount of credit can make a significant difference,” Mr Brogden said.

Over $200,000 has already been raised by FSC members for the charity partner, donated during the Conference Gala Dinner, held on Thursday evening.

New Board Chairman Appointed

MC duties at the event were shared between outgoing FSC Chairman Peter Maher, former Executive Director, Banking & Financial Services at Macquarie Bank, and his replacement, Greg Cooper, the CEO of Schroders Australia.

Mr Maher was elected to the FSC Board in 2004, and became Chairman in 2010. Speaking about his predecessor, Mr Cooper said: “Peter’s guidance and support of the FSC has been critical during this time of the most substantial regulatory change in the history of the financial services industry in Australia.

Mr Cooper has been Deputy Chairman of the FSC since 2011, and also held roles on a number of the Council’s Board Committees. A trained actuary, Mr Cooper commenced his investment career in 1992, and has worked in Hong Kong, Singapore and the UK. He is a Fellow of the Institute of Actuaries of Australia and is Ambassador for the Australian Indigenous Education Foundation.

Labor and Coalition Debate Super Reforms

Also taking to the FSC stage were Treasurer Chris Bowen, and Shadow Financial Services and Superannuation Minister, Mathias Cormann.

… policy change is good, as long as it is positive

Mr Bowen opened the proceedings on day one of the Conference, promoting Labor’s promise that it would introduce legislation to prevent major changes being made to superannuation tax policy for a five-year period. The FSC said it was pleased the Government had listened to its request for a moratorium, adding that the approach would give consumers and the industry certainty and confidence.

However, despite a challenge issued by Mr Bowen to the Opposition to back the plan, Senator Cormann said the Coalition would not support the legislation, because it would prevent positive changes from being implemented.

“There’s nothing wrong with change, per se. The benefit of a change of government comes to mind,” Senator Cormann said. “And policy change is good, as long as it is positive, predictable, well-considered and carefully and competently implemented.”

ASIC Approach to Churn

ASIC Deputy Chairman, Peter Kell, also presented at the event, highlighting the regulator’s future surveillance plans. For more, see: Risk Advice in ASIC Spotlight