While the nation continues to process one of the most significant reform Budgets of the past 25 years, this week the super sector has been finalising submissions on some major reforms in their own right.
Last month Treasury released three consultation papers with proposed reforms to lead generation, consumer safety and the Compensation Scheme of Last Resort (CSLR).
We will be releasing our submissions publicly next week, all of which will make the case for a comprehensive set of safety reforms, that bring governance and accountability to other parts of the system in line with APRA-regulated funds.
When 12,000 Australians lose more than $1 billion of their lifesavings as we saw with the collapses of Shield and First Guardian, the response needs to be strong and comprehensive to avoid future consumer harm.
A recent Ideally survey of more than 1,000 Australians found strong support for the Government to be bold in delivering a strong set of consumer protections.
A majority of Australians think the Government should press ahead with consumer safety reforms even if they upset some parts of industry, and 80% supported banning harmful lead generation advertising.
A compelling four in five Australians on social media say they want the Government to take strong action to ban predatory social media advertisements which entice people to move their super into riskier products.
It also found a shocking 45% of Australians surveyed said they had recently been exposed to these types of click bait ads on social media.
Disturbingly, almost two in three survey respondents – or 63% – were not aware that these types of ads were used to switch Australians out of their super funds into the collapsed Shield and First Guardian funds.
The devastating Shield and First Guardian collapses were enabled by shocking gaps in current consumer protections. Those events show how aggressive lead generation practices, high pressure sales tactics and gaps in oversight can be used to funnel Australians out of safe, high-performing, low-cost, regulated super funds and into unsuitable or unsafe super products, losing their life savings and undermining public trust in super.
The lesson from these collapses is clear: when protections are uneven, the harm doesn’t disappear – it simply moves to the weakest point in the system.
The Government must also deliver reforms across all three interlocking consultations. Tackling them separately risks of leaving gaps unfixed and displacing harm rather than stopping it.
Australians shouldn’t need to be experts to keep their retirement savings safe. The only durable solution is to lift the floor across the entire system, close the gaps that allow bad actors to operate, and restore a simple promise at the heart of super – that wherever your money sits, it is governed with the same care, scrutiny and accountability to protect your future.
