2018’s Big Superannuation Changes – And What We Can Expect From 2019

2018’s Big Superannuation Changes – And What We Can Expect From 2019

While the turmoil in Federal Parliament and the Financial Services Royal Commission were getting all the headlines, other low-key but very important changes had the biggest impact on super funds in 2018 and will again in 2019.

Productivity Commission Report Not the Main Game

Opinion polls have been pointing to the ALP as the favourite to win the next election. Either way, the priority of the Government after the election is going to be on implementing the recommendations made by the Financial Services Royal Commission. The recommendations made by last week’s Productivity Commission’s report on superannuation are going to have a lower priority, although they will continue to influence the policy debate.

Many of the Productivity Commission’s recommendations echo the draft recommendations they made last year, many of which have already been picked up by the Government or incorporated into the Insurance in Super Code. Their signature recommendation of allocating new entrants to the workforce one of ten “best in show” funds (unless they choose an alternative) is a political hot potato that probably won’t be implemented.

Royal Commission Report Set to Dominate the Policy Debate

The Financial Services Royal Commission will issue its final report right on time on Friday, 1st of February 2019, and the Government will make it public immediately. Whatever recommendations are made by the Royal Commission, it is highly likely that both the Government and Opposition will commit to implement all of them after the election.

My prediction is that the Royal Commission will recommend:

  • a ban on “grandfathered” trailing commissions;
  • more litigation and less negotiation with companies that break the law;
  • a new superannuation regulator;
  • a new or increased focus on conduct regulation;
  • a large number of prosecutions arising out of their case studies.

All of this is going to take a while to put in place. Legislation is not likely until the end of 2019 and implementation will take place from 2020.

In the meantime, the larger industry funds are experiencing higher than forecast member and contribution flows as they are perceived to have fared much better than their retail competitors at the Royal Commission.

While the superannuation world waits for changes arising from these high-profile commissions of inquiry, the APRA Outcomes Assessment Test, the Insurance in Super Code and re-engineered super fund reporting to the ATO are requiring major investments from funds and are already driving major changes.

New APRA Test, ATO Reporting and Insurance Code the Real Drivers of Change

APRA Outcomes Assessment:

APRA released a package of new requirements for APRA-regulated super funds in December 2018 intended to strengthen the delivery of quality outcomes for fund members. The key change is an annual outcomes assessment, requiring funds to annually benchmark and evaluate their performance in delivering these outcomes as part of their business planning cycles. Not only will this lift standards in super, it will also facilitate the merger of poor performing funds into better performing funds.

New ATO reporting:

New systems for super fund reporting (known as the MATS and MAAS projects) to the ATO will require funds to report on a near real-time basis, thus helping to identify employers not meeting their obligations. This will massively increase the volume of information being sent to the ATO and will mean that myGov and new online commencement forms will have much more comprehensive and up to date information.

Insurance in Super Code of Practice:

Most super funds are in the process of implementing higher standards and quicker claims processing for their members as part of implementing the Insurance Code. Many of the changes in the PYS legislation and recommendations made by the Productivity Commission were already incorporated in similar requirements of the Insurance Code. This includes the cessation of insurance cover for low account balance members and opt-in insurance for many younger members.

IQ Group is Here to Help

The IQ Group is keeping abreast of all these changes and is both mapping their impacts for many of our clients and designing and implementing solutions that improve the member experiences.

If you have questions or would like to find out how IQ Group can assist, contact us at enquiries@iqgroup.com.au.


Written by David Haynes

Designing Effective Remediation Programs that Meet Community Expectations

Designing Effective Remediation Programs that Meet Community Expectations

All financial services organisations should be setting up remediation projects to investigate their past and present practices, to identify examples of misconduct and ‘conduct not meeting community expectations’.

Many organisations across financial services – not just those put under the spotlight by the Financial Services Royal Commission – are undertaking major programs of remediation work. Many of these entities are super funds. While industry funds generally fared better than their retail fund rivals, the Royal Commission nonetheless identified problems across both sectors.

In the wake of the Royal Commission, the regulators now have a renewed interest in addressing failures in service delivery by super funds and other institutions.

While (for example) ASIC has had a ‘fee for no service’ project since 2015, they may be taking a harder look at problems and a harder stance on the penalties that should be pursued. It may be found that both APRA and ASIC should have scrutinised grandfathered arrangements more than they did.

Both regulators are going to be more likely to pursue public enforcement instead of enforcement ‘behind closed doors’, and APRA is likely to be rigorous in pursuing the member outcomes assessment.

The Royal Commission has revealed a diverse range of problems across nearly all types of financial services organisations, and past compliance reviews are not a guarantee of a clean slate.

This is especially the case where organisations have ‘sailed closed to the wind’ in meeting regulatory change requirements. It’s not just a matter of checking that specific regulatory requirements were met. Super funds also have the responsibility to ensure that the best interests fund members are prioritised. These responsibilities cannot be conveniently ignored in the case of grandfathered members, as seems to have happened in some cases.

What should be done?

Issue Identification:

Remediation projects start with identifying issue where processes have failed and gaps may need to be uncovered. As organisations preparing for the Royal Commission sometimes discovered, the act of investigation can unearth problems that were previously unknown.

In a previous career, there was a saying that “if you don’t think you have a unit-pricing problem, it’s only because you don’t know about it.” In today’s world, there should be no excuse for not hunting down errors that cost members money.


The prioritisation of issues for remediation will have regard to the size and complexity of the problem, the level of resourcing and timetabling needed, whether it is isolated or system and whether it relates to any existing remediation activities.  However, all of these factors need to be looked from the perspective of members’ best interests, and the processes for advising and keeping members and the regulators informed.

It has been striking how long it took for the regulators to be advised in some of the cases before the Royal Commission, with it often taking much longer for members to be told.  Financial institutions hold vast amounts of data but the level, quality and timeliness of data analysis in these cases – and reporting on it – was often found wanting.

Process Improvement & Governance:

The remediation process must also lead to process improvement and a focus on continuous improvement. Unnecessary hand-offs, delays and wastage, tasks that don’t add value, and inadequate performance management are sometimes found during the review process.

This is not just an operational exercise.  Appropriate governance structures need to be put in place to ensure that remediation is not just about ticking off a list of fixes.  Acting in members best interest needs to be assessed, as does ensuring the most efficient and cost-effective approach is taken, and that related and systemic issues have also been addressed.

Taking a Holistic Approach

The IQ Group has been undertaking analysis into compliance adherence, process and data analysis, project and change management, training delivery and team management, and are pleased that many of our clients are undertaking remediation management extremely seriously.

Written by David Haynes


If you would like to find out more or have any question, please send them through to us at info@iqgroup.com.au.