Royal Commission Recommendations

Royal Commission Recommendations in relation to Superannuation

For people like me in the financial services industry, waiting for the findings and recommendations of the royal commission was quite stressful. After months of hearing horror stories of the behaviours of the banks, superannuation funds and insurance companies it became apparent that changes needed to be made. What the little guys like me were concerned about is how would the changes impact my business and my clients.

Although the criticisms against the banks were harsh, the changes to business operations were not as brutal as many were predicting. Many were predicting that banks would be forced to move away from there vertical integration model. This is where they own both advice and wealth businesses and the potential for conflicted interests are high. The concern is that the banks (including AMP) use their advice business to funnel funds into their wealth businesses, not always in the best interest of the client. This did not come to fruition.

One of the surprising big losers from the recommendations was the industry funds.  The recommendation to have an individual only defaulted into a fund once will greatly reduce the amount of funds opened each year. With the bulk of default funds being industry funds, they will be hit hardest by this change.

 I think this recommendation makes sense, implementation may be a problem. This will prevent clients ending up with a number of funds and paying multiple administration and account keeping fees. It is also likely to reduce the default insurance cover they will hold and in turn reduce premiums. In the past if a client is defaulted into a number of superannuation, they would often pay a financial planner to consolidate those funds at some point, this will no longer be necessary.

The media is reporting that the industry funds will be lobbying against this recommendation. The other area that will hit industry funds was the banning of what Commissioner Hayne described as hawking Superfunds. Superfunds will no longer be able to incentivise via what was described as wining and dining employers to use funds as a default for their employees.

Advice fees will no longer be charged on MySuper funds, this makes sense to me, but will see some blow back from both the advice industry and the default superfunds (again primarily industry funds). If the advice is to invest in the low cost with defined minimum feature fund option, I don’t think that you’d easily be able to justify the ongoing advice fee being charged for this advice.

All these recommendations are designed to protect Superannuation investors with either low balances or low involvement in their Superannuation and I agree that they seem fair. Like all things the implementation will be the key to the success of these recommendations. Im sure there will be much more to play out with the Royal Commission over the upcoming months.

Author; Alex McKenzie Categories: Future Financial Services Blog

About the Author

Alex McKenzie

Alex McKenzie

Owner at Future Financial Services


  • Paraplanner at Zammit Partners Investments
  • Unit Trust Administrator at Colonial First State


  • University of Western Sydney
  • Penrith High


As a Financial Planner I help people to achieve what they would like in life. This involves helping you to identify the things in life they would like , developing plans to help achieve them and strategies to protect what you already have. We do this by providing Financial Advice to guide you through your life stages.

The financial planning process involves determining a clients current situation and financial objectives and tailoring strategies to assist in best achieving those objectives.

I am an expert in superannuation, investments and insurance, these are tools we use to help you achieve your goals.

I aim to use my knowledge of superannuation, taxation and Centrelink to efficiently use your assets and income to achieve your financial goals.

Retirement and pre-retirement planning, wealth creation, asset protection, insurance planning and estate planning are all areas of advice that I provide.

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