Don’t include us in CSLR funding say super funds | Australian Markets

Superannuation funds have made clear to the Treasury that they don’t wish to be wrapped up into the funding preparations for the Compensation Scheme of Last Resort (CSLR), arguing that the superannuation sector has a largely unblemished report in paying determinations from the Australian Financial Complaints Authority (AFCA).

In a submission to the Treasury review of the CSLR, the Association of Superannuation Funds of Australia (ASFA) has expressed concern about the associated fee of the CSLR to the financial advice occupation however has argued that isn’t a motive to broaden the funding regime to superannuation funds.

“Given current concerns regarding the funding needs of the scheme and the burden that imposes on impacted sectors of the financial services industry, the review provides an important opportunity to re-examine the scheme’s funding mechanism to ensure it is operating in a sustainable manner,” the ASFA submission stated.

“It can be well timed to re-consider the scope or protection of the CSLR, based mostly on up-to-date information pinpointing the place in the industry uncompensated losses are arising. We word that it’s important to make sure that personal financial advice is accessible and reasonably priced.

“We acknowledge concerns raised by other stakeholders regarding the decline in the number of financial advisers and the impact that the CSLR model in its current form can have on the direct costs of those advisers who have not themselves contributed to the uncompensated losses. We further acknowledge that this may be a factor influencing decisions by potential new entrants to the sector,” the ASFA submission stated.

“That aside, ASFA notes there is no data suggesting undischarged compensation is an issue within the APRA-regulated superannuation sector,” it stated.

“We maintain our long-standing position that there should be no cross-subsidisation from the APRA-regulated superannuation sector in respect of undischarged compensation arising in other sub-sectors or in relation to products and services not provided by the APRA-regulated superannuation sector.”

The ASFA submission closed with the message that whereas it is likely to be a good time to review the CSLR and how it’s funded, superannuation funds ought to stay out of the combination.

“It is, in ASFA’s view, an opportune time to reconsider the sub-sectors that are ‘in scope’ for the CSLR, to ensure the scheme is appropriately targeted. However, we are strongly of the view that any extension beyond the presently ‘in scope’ sub-sectors would only be appropriate where there is compelling evidence of undischarged determinations – that is, uncompensated losses,” the submission stated.