How will the Banking Royal Commission affect superannuation claims?
Published 24 Jul 2018
On August 6, the fifth round of public hearings will commence for the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The country’s super funds will be the last organisations under the spotlight, with the commission having already uncovered various failings across Australia’s finance sector.
But what impact is the investigation likely to have on superannuation-based insurance claims? The revelations the commission has unveiled so far may yield some clues to how the super industry could fare in a couple of weeks.
Widespread misconduct in financial services
Since the public hearings began in March, a series of unsavoury practices has come to light. Perhaps the biggest scandal was that AMP had lied to regulators about charging customers fees without providing any services, leading to Chief Executive Craig Meller stepping down.
Commonwealth Bank also admitted its financial planners had knowingly charged fees to dead customers. Other examples of poor practice from banks and financial advisers included alleged bribery, mis-selling insurance to those unable to afford the products, and forged documents.
Barnaby Joyce, currently a backbench MP for the Nationals, has since apologised for opposing the launch of the commission when he was deputy prime minister.
“In the past, I argued against a royal commission into banking. I was wrong. What I have heard so far is beyond disturbing,” he tweeted earlier this year.
Superannuation funds step up to the plate
Superannuation is already undergoing significant overhauls in Australia. The federal government has committed to reforms, and a recent Productivity Commission report highlighted various inefficiencies with the current system.
Financial Services Council Commissioner Ken Hayne claimed 17 per cent of public complaints the royal commission has received were due to superannuation failings – nearly double the amount for financial planning.
“It isn’t clear which segments of the industry these complaints relate to, but the proportion vindicates the inclusion of superannuation in the royal commission,” he told the Australian Financial Review.
Given the extent of the misconduct already uncovered, industry analysts will no doubt be expecting the super industry to face similar embarrassing exposures.
Will consumers benefit from the royal commission?
The full impact of the royal commission won’t be known for some time. However, the industry could be heading for a major shake-up if funds are found to have deceived, mistreated or defrauded customers.
The Productivity Commission’s draft report has already claimed super life insurance policies often fail to provide the best results for some fund members. Further problems unveiled in the royal commission’s findings could result in changes that give insurance claimants a fairer deal in the future.
Do you feel you have been unfairly rejected after a super insurance claim? Please contact Gerard Malouf & Partners Superannuation Lawyers to learn more about our no-win, no-fee service.