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Parliamentary Joint Committee on Corporations and Financial Services
05/10/2012

BRAGG, Mr Andrew James, Senior Policy Manager, Financial Services Council

HODGE, Mr Nathan, Financial Services Council

Committee met at 08:31

CHAIR ( Ms O'Neill ): Good morning, everyone. I declare open this public hearing of the Parliamentary Joint Committee on Corporations and Financial Services inquiry into the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012. The committee is to report by Tuesday, 9 October 2012. The bill is the third tranche of legislation implementing the government's MySuper and governance reforms. In March this year, the committee examined the provisions of the first two tranches of these reforms, the Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011 and the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Bill 2011. These bills established the framework within which the MySuper products will operate. This tranche establishes various rules relating to the operation of MySuper products. Many of the provisions are based on the recommendations of the Cooper review of superannuation, which presented its final report in June 2010.

I welcome you here today, and I remind everyone that witnesses giving evidence to the committee are protected by parliamentary privilege. Any act which may disadvantage a witness on account of their evidence is a breach of privilege and may be treated by the parliament as contempt. It is also a contempt to give false or misleading evidence to a committee. Witnesses should be aware that if in the giving of their evidence they make adverse comment about another individual or organisation then that individual or organisation will be made aware of the comment and given a reasonable opportunity to respond to the committee. The committee prefers to hear evidence in public, but we may agree to take evidence confidentially if the committee believes it to be relevant to the inquiry's terms of reference. The committee may still publish confidential evidence at a later date, but we would consult the witness concerned before doing this.

Our first witness today is Mr Andrew Bragg from the Financial Services Council. Thank you for your submission. I understand you are accompanied by Mr Nathan Hodge. I invite you to make a short opening statement, and then the committee will ask questions.

Mr Bragg : Thank you to the committee for the opportunity for the Financial Services Council to appear this morning. We have lodged a submission this week, and I appear today with Nathan Hodge, who is a special counsel at Minter Ellison lawyers.

Australia has had the benefit of 20 years of compulsory superannuation. We now have a pool of super equating to $1.4 trillion, the fourth largest pension market in the world and a larger quantum in the capitalisation of the primary securities exchange than our national GDP. Over these past 20 years our national household savings rates have increased in contrast to an OECD trend in the other direction. This has been an incredibly successful policy for Australia, which has evolved with bipartisan support into a system with a flexible regulatory environment to meet very diverse individual needs.

The MySuper reforms are significant and this bill should not be considered in isolation from the other Stronger Super bills, the future of financial advice reforms and the current Productivity Commission inquiry into default funds. MySuper as announced by the Minister for Financial Services and Superannuation on 21 September 2011 has been substantially improved for consumers, employers and the superannuation industry through the course of extensive consultation. The FSC supports the objectives of the MySuper reforms.

The bill the committee is considering today—the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Bill 2012—is the third in a number of tranches of MySuper related legislation and there is one more to come. The government in our view has materially improved this bill on matters such as insurance and portfolio holdings disclosure following consultation on the exposure draft released in April 2012. We thank the government for making these necessary practical changes to the bill.

As our submission outlines, we have significant reservations about one area in particular—schedule 6, moving accrued default amounts, which is one of the two legislative transitional measures to MySuper. Transitioning to MySuper involves two key policy objectives: one, new default super contributions are paid into MySuper from 1 January 2014 and existing default balances—that is, the money in the system today—are also transitioned to MySuper at a future point in time, which is in the legislation as 1 July 2017. This schedule deals with the latter, which is to move that money into MySuper as at 1 July 2017. The problem really is with the breadth of that drafting. It goes well beyond the current definition of default investment option. It actually captures members who have exercised choice of fund or choice of investment option. Fundamentally we believe that members who have chosen a fund should not be moved into a MySuper product. To do so would be a significant divergence from the central tenet of the MySuper reforms, being to principally protect members invested in workplace or default superannuation funds and in the default investment options.

To be clear, we have supported and we continue to support the transition on the basis that it moves default investments. We have publicly supported the government's policy of transitioning existing default balances as it will lead to one rather than two accounts for members and deliver greater efficiencies for the system at large. However, the present drafting captures three classes of members who specifically should not be captured by this drafting: one, members who have exercised choice of fund, signed a PDS application form and invested in a choice product where they have not given an explicit investment direction; two, members who have exercised choice of investment and invested all or partly in the product's default option regardless of whether it is a default or choice product; and, three, members who have explicitly invested in any superannuation fund that has been subject to a successor fund transfer.

At the moment all three types of members are captured and they would be transferred into MySuper as at 1 July 2017. I will illustrate what this means in practical terms to give you an idea of the macro impact of the current drafting of accrued default amount. Over one million non-default superannuation members within the choice framework will be transferred into MySuper. Members would have their predetermined risk/return profiles of their investment jeopardised at potentially critical stages of their lives such as pre-retirement. There would be significant transactional costs and a market impact arising from the forced transfer of approximately $43 billion in choice member assets. There would be the potential loss of insurance and other member benefits for choice members. There is also the potential of a high level of post-transfer confusion and costs to unwind if what is known as the opt out is not actioned by the choice members captured by the definition.

At a member level I have a couple of examples of this provision. People invested in cash through a superannuation wrap moved into a balanced investment with high allocation equities; people invested in a growth fund moved into a balanced fund; investments in a lifecycle fund moved into a balanced fund; investments with a chosen provider moved to another—just to name a few examples.

As noted in our submission, we have provided an alternative drafting of accrued default amount, which would ensure that default members and not choice members are indeed transitioned as at 1 July 2017. This is really how we believe that transition has always been envisioned, right through the whole process over the last three or four years. The Cooper review, the Stronger Super consultation process that was chaired by Paul Costello, all the ministerial policy statements and indeed the regulatory impact statement all talk about default members; they have never discussed or canvassed in any way, shape or form transitioning choice members into the MySuper environment by force of statute.

So, to wrap up, our proposal ensures that the policy objective is met—that is, to transition default balances into MySuper—and we believe that is a robust definition, which we have provided in the submission. Thank you. I am happy to take any questions.

CHAIR: Thank you, Mr Bragg. I will commence the questions by asking for a bit of clarification about your interactions with members who have made a choice. You talked about three different categories of members, and I would like a response in each of those categories. When a member has made a choice, how often would you be in contact with that member to verify that they are continuing to make that choice actively?

Mr Bragg : If the member has chosen a fund, the fund would talk to the member at least annually in terms of their statements and whatnot. But typically a member who has chosen a fund would be very engaged. They may actually instigate contact with the fund itself. They may call the call centre to change their investment strategy or they may seek to amend their insurance arrangements. In cases where there is an adviser involved, they may also be interacting directly on an ongoing basis with their adviser. Some members who have exercised choice of fund would be going directly, via a website. In recent weeks you will have seen that ING Direct has a direct product—Living Super, I think it is called—and then there is BT Super for Life. These sorts of products have been in the market for quite a while. The member basically goes in and accesses that product online. So that is a direct interaction they have, but there is also the case where there is an adviser involved. So there are a couple of different avenues there for contact between the fund at large and the member.

CHAIR: What percentage of your members do you think contact you regularly on an annual basis? You send out annual statements. What percentage contact you directly?

Mr Bragg : I do not have any data with me today on call centre activity, but certainly there are particular times in the year where activity levels spike. Superannuation is characterised by two structures. There are default funds, and then there are choice funds. Providers such as Macquarie, to name but one, have never had a default fund business; they do not deal with employers. So everyone who is a member of their fund has gone into that fund of their own volition. Therefore, they typically have a higher level of interaction with their members through the call centre or perhaps through an adviser than, say, a fund that sources most of its members through an award or another structure whereby members basically defaulted into that.

CHAIR: So we can clarify then that there would be very varying levels of engagement, depending on the sort of choice.

Mr Bragg : Or really on the sort of fund it is.

Mr Hodge : That is very true. Certainly some funds are looking for new ways to interact with their members. For example, funds such as BT Super for Life are moving more towards online. I certainly see, from my range of clients, is that they are looking more and more towards online as a way to interact with membership.

CHAIR: Would it be possible to get, on notice, a differentiation across those different products that you have just explained and the degree of superannuation member-initiated contact?

Mr Bragg : We can certainly get some quite good data, particularly on call centre activity.

CHAIR: Is it possible that somebody could have made a choice very early on, when they started their superannuation—25 years ago, for example—and not altered that choice in any way since that point of time?

Mr Bragg : Yes, that is possible.

CHAIR: How many people might be in that position and might be among the million that you have referred to?

Mr Bragg : The million are the people who have chosen a fund and would be subject to the definition of accrued default amount. In terms of how many people have chosen a fund, if you talk to the clearing houses that deal with a lot of the contributions from an employer to a range of funds, they will say that around 25 per cent of members choose a fund. That is pretty consistent with some of the Cooper findings and whatnot. There is a pretty high labour market turnover as well, and a lot of people change super when they change jobs.

I do not have any conclusive evidence on this, but I would say, given that the super system has only been there for 20 years, that people probably have not been in products for 25 years. There will be some people who have established arrangements with a particular chosen fund, and they often tend to set and forget. Once people turn their minds to their financial affairs—which often the last thing they want to do—they sit down with an adviser or a fund and put in place their arrangements, but they do not want to touch it again. In the evidence we provided in our submission, there is quite a good example where one particular provider has the service where a member can nominate binding death nominees, in the case of their death. That is a member initiated process. When that provider has gone back to that member who initiated that process and said, 'Please have another look at this and give a view on whether that is still the appropriate nominee,' they get response rates of around 30 per cent.

Mr TONY SMITH: That can indicate two things, can't it? At its worst it can indicate that some are uninterested, but it can also indicate that nothing has changed: 'My wife is still my wife. Why do you keep asking me this question?'

Mr Bragg : That is right.

CHAIR: There is quite a deal of information in the submissions that indicated that if material is sent out, only 30 per cent of people might respond to it. There were a number of reasons attributed to that low rate of response. But, given the amount of money that people have in these schemes, that seems to me to be quite a problem. You indicated, in your evidence this morning, that BT Super for Life is one that is changing to a more internet-friendly approach, which might work with a certain part of the population. If the argument here is choice, the question is: how actively do you think the sector has really engaged with its members and made it very easy for them to participate in decision-making? What do you see as the barriers that meet this only 30 per cent response?

Mr Bragg : I think we are talking about arrangements that have no relation to a default fund. You cannot enter BT Super for Life through an employer, for instance—if that is the example that you want to use. The person who is a member of BT Super for Life today is a member of that fund because they have gone to the trouble of going to the website, looking at the PDFs, filling out an application form—

Mr TONY SMITH: You have pointed out the important history of this going back 20 or 21 years. The 25-year example the chair uses would be very rare. That would be someone who has had super since before 1988. It might be useful for the committee if you ran through what it takes to exercise choice of fund, which I think you were about to do, Mr Bragg—in other words, the steps that you need to initiate. After you have taken that initiative and got through that red tape—particularly if it was 20 years ago—what does it take to get into that situation?

Mr Bragg : There are a couple of things that I will say. The distinction that we are trying to draw very clearly for the committee is not that people who are default members should not be subject to the transfer; we think that they should be. There are other views that you will hear today that do not accord with that. Some people do not think that there should be a transition at all. We think that there should be, but it should be targeted to members who have never taken any direction, who have never gone to a financial advice website and who have never gone to an adviser but who have exercised choice of fund. To give an example, if I work at the Wesley Centre and the default fund is Australian Super—and BT Super For Life is an example of a direct product, so there is no adviser in this example—I would have to go to the website, look at the PDS, sign an application form and establish that fund. Then I would have to take that to my employer and say: 'I don't want you to pay it into Australian Super anymore. I want you to pay it into this fund.'

Mr TONY SMITH: And make sure that happens.

Mr Bragg : Obviously, that then flows through. There are other more intricate examples where a member may go and engage an adviser and use another product. That obviously involves those same steps.

Mr TONY SMITH: The point is that you have to take a number of steps. Given that someone has had to take all of those steps, the fear is that they would then have no interest.

CHAIR: There is differentiation across the whole market because you have a different range of products and different levels of engagement.

Mr FLETCHER: Do you believe that the breadth of definition in section 20B is deliberate in terms of how broad the range of persons to be compulsorily moved across to MySuper is or is it an inadvertent drafting error such that the original policy intention has not been fully reflected?

Mr Bragg : I can only assume that it is more than an inadvertent drafting error, given the range of public statements on the Cooper review and the endorsement of that review and what is called the choice architecture for superannuation by the government in ministerial statements and the regulatory impact statements.

Mr FLETCHER: One thing that I wondered, looking at your submission and others, in the circumstances in which members are transferred is it conceivable that members could be transferred who are already in a low MER fund?

Mr Bragg : It is possible that members could be transferred from a fund with one fee rate to one with a different fee rate or to an investment that is quite different to what they have chosen. The historical data that we have on fee shows that the members who in our view are supposed to be targeted by these measures—so members in a number of default options, although not all—would be in quite high fee arrangements and they should be transitioned to lower fee arrangements. That is certainly something that we have supported the government on. We might see some perverse outcomes. For us, this is really an argument about scope, not about the intent of the policy. Some of the more perverse outcomes are more around the asset allocation points.

Mr FLETCHER: I wanted to ask you about those. Let us say that you have a member who is in a default option in their current fund, which for argument's sake has a relative high weighting to fixed interest, who—because of the way the definitions in section 20B operate, as you have described—gets moved compulsorily into a My Choice product. Is it possible that they could be moved to a product which has a higher weighting of risky assets and a lower—

Mr Bragg : That is certainly the case. The most concerning example in terms of applying this in the choice environment is that there are a number of providers what is called a wrap platform, which is quite similar to SMSF. It gives the member complete control over the nature of their investments. Those products have—and 'default' is a bad word here—a hub of money, called a cash hub. That money is held in cash. Under this drafting, that is picked up. Members who have their money in the cash option would then have to transfer that to MySuper. MySuper, as per the first bill, which this committee looked at in March, has very prescriptive arrangements about what MySuper can be. The investment has to be a diversified portfolio. It has to have a pretty high allocation of assets to growth assets. You would have examples of people going from having fixed interest assets to having growth assets, such as going from cash to shares. Depending on the stage of your life, that would be quite a significant risk.

Mr FLETCHER: Just to be clear, it is possible that a member would have looked at the default option in their existing fund and said, 'I'm happy with that,' because it is—for example—50 per cent interest and that suits them given their stage of life. Under the drafting of section 20B, they would be defaulted into a MySuper product which might well have a higher allocation to growth assets. They would thus end up in something that was less well-suited to their life stage and their needs.

CHAIR: But that would only happen if they did not opt out.

Mr Bragg : That is correct.

CHAIR: They will get an option to stay with the structure that they have. Essentially, they will have an option to reconfirm their choice or to move to a default fund.

Mr FLETCHER: To put it another way, if you have made a choice that suits you and you think that you have ticked that box and you do not need to worry about it again, because of the way that this legislation is set up you will now need to make an active choice to reconfirm the choice that you have already made.

Mr Bragg : Correct.

Mr FLETCHER: As a consequence of that, there is likely to be—

Mr TONY SMITH: You will have to take all the steps.

Mr FLETCHER: You will have to take all the steps. That is right, isn't it, Mr Bragg?

Mr Bragg : That is right.

Mr FLETCHER: There is therefore the potential consequence that, through an action imposed by government, there will be a proportion of people who feel that they have at risk allocation that suits them who could find themselves defaulted into something that is riskier and less well-suited to them.

Mr Bragg : And they could also lose things like insurance and other arrangements that they have established for themselves. The bill as drafted absolves the trustee of liability. Therefore—

Mr TONY SMITH: You mean life insurance within super and things like that?

Mr Bragg : Correct. People might have gone to the trouble of setting up something like that. The most extreme example is the product for which the default option is cash. It is a choice product; it is not a default product. You cannot get into that product through being defaulted at any other time. You may also have insurance attached to that.

Mr TONY SMITH: That would fit as a typical example in this sense, which is someone wanting their own choice of fund and also wanting the composition to be cash because they are particularly conservative and they want to set it up and forget it, because it is cash rather than Australian or international equities.

Mr Bragg : Exactly. And you might need that cash to pay a pension or whatever else. Fundamentally, these sorts of providers, whether BT or Macquarie or MLC, have some product structures that are very different. As you know, the superannuation industry is characterised by a number of different structures.

Mr FLETCHER: Just on that, is it possible that a member could be tipped out of a fund through which they had insurance cover that might have been set p 15 years ago and then find themselves in a new fund and not eligible to get cover because, for example, you now have a medical condition which you did not have 15 years ago? Is that a risk?

Mr Bragg : It is not quite as clear as that. Because you have to be transferred into a MySuper fund, there has to be insurance. One of the protections in MySuper, and a very appropriate one, is that there has to be default cover provided. No-one is going to go from having some insurance to having no insurance. But what could happen is that people could have had underwriting or whatever else in their choice product and then go into—

Mr FLETCHER: So you could certainly find yourself in a position such that you have inferior insurance cover.

Mr Bragg : You could lose insurance.

Mr FLETCHER: You could lose insurance.

Mr Bragg : Yes, but you would not lose it completely.

Mr FLETCHER: But you could end up with less cover than you had before.

Mr Hodge : Correct. Another example is if you had income protection cover in your choice fund. You could move into MySuper, which is not required to have income protection cover, and lose that.

Mr TONY SMITH: With those sorts of issues, you can certainly envisage situations in which, as Mr Bragg was indicating, someone at a certain stage of their career has said, 'No, I want the choice of fund, and I want this particular asset mix, which is very conservative, and to pay the fees and to pay the insurance premium and to pay the income protection cover. That is all I want at this stage in my life. I now do not need to think about it or worry about the share market.

CHAIR: They have the capacity to confirm that with their choice. As Senator Cormann is not on the line, I will go to Senator Thistlethwaite.

Senator THISTLETHWAITE: Can I just clear this up: you are advocating that anyone who has made a choice of fund decision in the past should not be transferred into the default fund once MySuper begins.

Mr Bragg : Consistent with all the findings of the Cooper review, which was an independent inquiry, and all of the government statements, this is about reform of default superannuation. So the system is segmented formally between members who do not want to engage and who do not want to make a choice being subject to a new set of protections—a ban on commissions and all those sorts of things that the industry supports—and another sphere of members who want to be engaged but who do not quite want to be in an SMF. If you think about it, it is almost like the default SMFs on one side and members who want to choose their own fund on the other. Fundamentally, we do not believe they should be part of this transfer.

Senator THISTLETHWAITE: Take for example a situation that occurs at the moment: someone has been working for a particular employer. They were covered by award super, so they were defaulted into whatever industry super fund was specified in the award. They were happy with that arrangement. They were happy with the decisions that the trustee was making. They then move employer. They go to the new employer. The new employer says, 'We've got a different default fund.' The employee says, 'No, I would like to remain in the current fund that I am in, the industry super fund.' They fill out a choice of fund form to remain in the industry super fund that they were originally in, but they are happy to remain on the default option. What occurs in that circumstance when MySuper begins?

Mr Bragg : If they have exercised choice of fund then that is an engagement. There are a number of different ways that you can look at this, and that is an example where you are saying that the member basically wants to stay with their old default fund and they have exercised the choice to do so. That is an example. But there are also examples where a member has chosen a completely different fund under the same choice of fund provision, which can be completely different from that of effectively staying with their old default fund.

CHAIR: Can I interrupt to give a direction to the people on the line. I think Ms Smyth has joined us. Senator Boyce and Senator Cormann, if you are on the line, could you please hang up and the secretariat will contact you again and establish better lines, because we have a problem at this end. Mr Bragg, please feel free to continue.

Mr Bragg : That would be one example where, to be very clear, in our view that member has exercised choice of fund. They still have to fill out a choice form and provide it to their employer.

Mr FLETCHER: Can I just ask a question in relation to Senator Thistlethwaite's example. In the situation where the member is in the default fund from the first employer and the MySuper commences, there is nothing to stop that default fund approaching the member and saying, 'We now have a MySuper fund.

Mr Bragg : Correct. And just to be clear: in the example that you used, let us say it is an industry fund and members access it through an award, a number of industry funds have—it is a simpler model—a default option. Basically, they are public offer funds, as you indicated, because that member may not still be working. Let us say in that example that the member was in the building industry and Cbus was their default fund. Now they are working in hospitality but they still want to be a member of that fund—they can do so because it is a public offer fund. It is often quite a simple structure whereby the member can just go into that same option—it is a balance default option. In funds like BT, MLC or Macquarie there would conceivably be hundreds of different options that the member could elect to choose from of their own volition. The point I am trying to make is that it is a very different structure. An industry fund may be able to just rebadge their default option to MySuper, and that is great; but that is not going to work across other structures where the members are more engaged. It is much more of a self-initiated fund process with a lot more choice.

Senator THISTLETHWAITE: I am not clear that the person has initially indicated to be in a default fund. Let us say that, when the transition occurs, they have been sent something but they do not reply to it. What happens to that person then?

Mr Bragg : They get transferred.

Senator THISTLETHWAITE: They get transferred into the MySuper default.

Mr Bragg : If you miss the mail, you are gone.

CHAIR: So that transition point is critical. Did you want to add anything further?

Senator THISTLETHWAITE: You made an example earlier of someone who may be in a cash option. So they have a very basic product.

Mr Bragg : Not necessarily.

Senator THISTLETHWAITE: And you are saying that they have made a choice to be in that correct portfolio.

Mr Bragg : You can only choose to get in there. There is no way you can find another way into that product. Often that is used for liquidity management. It is a quirk and a definition that gets captured. It is called a cash hub. It never has money there to manage. Rather than having to buy and sell assets all the time in order to pay their pension, because they are an engaged member—and they want to have a pension paid to them—it is a quirk that gets captured.

Mr Hodge : Another situation that may occur is that a lot of retail funds like to amalgamate their super funds to create efficiencies for their members. That person may have selected the cash option before the transfer, but because the definition only focuses on elections made to the current trustee, it would not recognise that past transfer, so even though they are in the cash option in the new fund, they would still be caught.

Senator THISTLETHWAITE: Is that the only issue that you have with this legislation?

Mr Hodge : Yes.

Senator THISTLETHWAITE: Are you comfortable with the rest?

Mr Hodge : Yes, it is the only substantive issue.

Mr FLETCHER: Can I just ask about the issue where there is a successor fund? If I am a member and something happens that is beyond my control—the fund that I am in gets merged or there is a successor fund established—what does that do to any active choice that I have made, under the current drafting of the bill,?

Mr Bragg : You initial choice is not acknowledged.

Mr FLETCHER: So you end up again being in the position that you will be compulsorily moved into a MySuper product even though, as far as you are concerned you have exercised an active choice to be in another kind of product.

Mr Hodge : Yes. And those successor fund transfers occur all the time. It may have been a successor fund transfer that occurred six months ago. You made the choice seven months ago. But you would still be caught.

CHAIR: Senator Cormann, can you hear us on the telephone?

Senator CORMANN: I can hear you very faintly with lots of noise in between. I can hardly hear anything at all.

CHAIR: Senator Cormann, we are trying to fix the line as best we can. I know that you definitely want to ask questions of the Financial Services Council. Do you want to go ahead and ask those questions?

Senator CORMANN: I can hear you very faintly. If you can hear me—

CHAIR: We can hear you very clearly so if you want to ask your questions whatever is answered will certainly be on the record. Hopefully the line will improve.

Senator CORMANN: I am not sure. It is very faint.

CHAIR: Can you hear me now?

Senator CORMANN: It is very faint.

CHAIR: We are getting from Broadcasting Services that the problem is not at this end and that the problem is with the phone at your end. We can hear you if you want to put your questions for the Financial Services Council on the record.

Senator CORMANN: I cannot really hear what you are saying so Paul Fletcher is going to have to do it for us. I have sent through to him some of my questions so I figure he will be able to deal with them.

CHAIR: Thank you, Senator, and if you could try to get a better line from your end we hope you will join us a little later. We will go to Mr Fletcher.

Mr FLETCHER: I am interested in the view of the Financial Services Council about the impact of the way that we have had multiple tranches of legislation covering MySuper. What challenges does that create in implementing the regime?

Mr Bragg : I think to be fair we have had a long period of consultation and the government has been very reasonable in providing basically 2011 to have a process, which was led by Paul Costello, to look at how the elements of the reforms should be crafted in legislation. Clearly, it is a challenge dealing with, as you say, a bit of a fragmented set of bills and I think it is increasingly so given there is likely to be a fourth bill and MySuper commences on 1 July 2013 so we are getting—

Mr FLETCHER: When did the first bill come out? Was that a year or more ago?

Mr Bragg : I think it was at the end of 2011.

Mr Hodge : Yes. I think from memory the exposure draft was in October or November 2011.

Mr FLETCHER: So four separate bills across this area with implementation from 1 July 2013 at a time when the industry is also dealing with the future of financial advice, SuperStream and other changes. Is that in your view an exemplary approach in making it easy to comply?

Mr Bragg : I think it is still achievable but the closer you get to within six months of commencement then you have to start to look at whether or not these large organisations can meet the compliance dates and then it becomes a conversation about whether there is a facility sort of approach.

Mr FLETCHER: Just on that: are your members yet in a position where, for example, they can know with certainty the IT changes that they would need to make in the MySuper area?

Mr Bragg : At this stage I would say it is still possible to meet the deadline of 1 July 2013.

Mr FLETCHER: Would you call it tight?

Mr Bragg : Depending on what is in the fourth bill, which we still have not yet seen, it may well be the case that given all the other changes happening on 1 July 2013 that, obviously, it is a red-letter day for the financial services industry in terms of this suite of reforms.

Mr FLETCHER: Thank you.

CHAIR: I thank you for your assistance to the committee today in the most trying circumstances. We look forward to reading the transcript, which has captured everything in detail. Thank you to Mr Fletcher for putting Senator Cormann's questions on the record.

Mr Bragg : Thank you.