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5 July 2021
The Insurance in Superannuation Voluntary Code of Practice has been replaced with a new guidance, sparking a storm of criticism from consumer advocacy groups.
The code’s joint owners – the Australian Institute of Superannuation Trustees (AIST), the Association of Super Funds Australia (ASFA) and the Financial Services Council – announced the move to drop the code last week.
They say the new guidance, comprising two documents, “maintain or enhance key components” of the scrapped code.
“This will ensure that consumer protections are maintained in areas which are not currently covered by legislation and regulation,” they say in a joint statement.
“The voluntary code owners have recently consulted superannuation trustee members about further protections for vulnerable consumers, and the new guidance to trustees will incorporate this feedback and go beyond the statutory framework to help them improve member outcomes for this important cohort of consumers.”
But consumer advocates have criticised the decision, saying it amounts to a “self-interested move” that will lead to less consumer protection.
The voluntary code was launched in July 2018, setting out maximum payment expectations for automatically provided life cover and improved opt-out processes. It also outlines measures to address unintentional payments for multiple policies and promotes better claims handling.
“The [voluntary code], in their own words, was the superannuation industry’s commitment to high standards when providing insurance to members of superannuation funds,” Super Consumers Australia Director Xavier O’Halloran said.
“Both the Productivity Commission and [Hayne] royal commission recommended that this industry code become enforceable.
“As Commissioner Hayne said, if you are going to make promises you should expect to keep them.”
Consumer advocates say the decision to scrap the code shows the industry is trying to avoid keeping its promises.
Financial Rights Legal Centre CEO Karen Cox says the industry needs a robust independent monitoring of its culture through a mandatory industry-wide code.
“Reliance on current structures is insufficient to improve consumers experiences,” she said. “Superannuation bodies are often guilty of failures in claims-handling processes that have serious detrimental impacts on clients.
“This includes failing to pass on consumer complaints to insurers, [and] neglecting to provide consumers with important information or documents such as claims forms or product disclosure statements.”