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Economics Legislation Committee
31/05/2017
Estimates
TREASURY PORTFOLIO
Superannuation Complaints Tribunal

Superannuation Complaints Tribunal

[15:25]

CHAIR: Ms Davis, thank you for joining us today. Do you have an opening statement?

Ms Davis : I have a very brief opening statement.

CHAIR: Extremely brief. We are running very, very behind schedule.

Ms Davis : Thank you. Good afternoon, Chair and committee members. By way of brief background, the Ramsay review found that superannuation disputes can have unique and complex characteristics and recommended the new single external dispute resolution body be supported by appropriate statutory provisions for superannuation disputes. The SCT differs from the other existing EDR bodies for financial services in that the SCT is a statutory body.

The approach taken to transition to the new body and the oversight of that transition are critical to the experiences of both future complainants and complainants already with the SCT.

At the end of March 2017, there were 1,600 open complaints with the SCT.

The Treasury fact sheet 'The Australian Financial Complaints Authority' indicates that the SCT will continue to operate to 1 July 2020 to resolve open disputes. We will be funded through the APRA financial institutions supervisory levies.

A smooth transition to the new EDR body requires that the SCT be adequately resourced to close the number of open complaints by 2020 and to undertake the additional work associated with transition. Thank you.

CHAIR: Thank you very much, Ms Davis.

Senator GALLAGHER: Thanks very much, Ms Davis, for appearing today. Could you just briefly outline what the SCT does. I think this is the first it has been called to estimates, so could you just tell us in a couple of minutes.

Ms Davis : Certainly. The Superannuation Complaints Tribunal is the body for resolving superannuation complaints. A superannuation complaint is essentially any complaint about a decision of the trustee, so it is something the fund did or did not do. Our jurisdiction covers the regulated funds and some of the public sector funds that have been elected in. That is a broad summary.

Senator GALLAGHER: In what year was the SCT established?

Ms Davis : In 1992-93, so our establishment coincided with the establishment of compulsory super.

Senator GALLAGHER: So it was a deliberate decision at the time that the compulsory super system came into being to have a Superannuation Complaints Tribunal or a complaints body?

Ms Davis : I cannot speak for the decision process, but certainly bringing in compulsory super—

Senator GALLAGHER: But it coincides with that?

Ms Davis : Yes, and the framing was looked at for how to consider disputes.

Senator GALLAGHER: You are established under statute?

Ms Davis : Yes, we are established by the Superannuation (Resolution of Complaints) Act 1993.

Senator GALLAGHER: How many complaints do you deal with a year?

Ms Davis : It is roughly 2,300 to 2,600 a year. The nature of those complaints—

Senator GALLAGHER: Sorry, could you just—

Ms Davis : 2,600 or 2,400—it varies. That has increased significantly over the last 10 years, and what we have also seen, particularly in more recent years, is a dramatic increase in the volume of inquiries we get.

Senator GALLAGHER: What do you put that down to?

Ms Davis : I think, more generally, an awareness of superannuation and people taking interest, so they look for answers.

Senator GALLAGHER: Would all of that be in your annual reports?

Ms Davis : Yes, our annual report discloses, I guess, by volume the types of work we do and also the nature of disputes. In terms of the nature of disputes we get, they can be a little bit different from other financial disputes. If we think of something like the distribution of a death benefit, there can be many consumer parties, so it is not just a dispute between the provider or the super fund and a single consumer.

Senator GALLAGHER: Yes. That was one of my questions. Can you tell me how the work of the SCT differs from that of an ombudsman such as the Financial Ombudsman Service.

Ms Davis : As a statutory body, we are established in legislation. That sets the parameters around our powers and what we can do. We are similar to the other bodies in that we resolve individual complaints; the difference is the nature of those complaints. Over 25 per cent of the claims we resolve are death benefit disputes. We do not have, under our act, a systemic investigation type of capacity. That might be one of the differences that has been highlighted through the recent review. An important distinction, particularly for the nature of superannuation disputes, is that because we are established in legislation we can issue a binding determination rather than relying on contract law to get to a determination point. So we replace the decision of the trustee; we do not sit as an agreement alongside that.

Senator GALLAGHER: And it is binding.

Ms Davis : Yes. To the extent that it replaces the trustee decision—

Senator GALLAGHER: There is no other decision.

Ms Davis : It does not require the explicit consent of the parties to come into effect. Parties do have the option to have that appealed through the Federal Court.

Senator GALLAGHER: What is your current budget?

Ms Davis : The resources for the SCT—under our act, section 62, ASIC provide our resourcing.

Senator GALLAGHER: But it is funded through a levy from the fund.

Ms Davis : It is through the APRA levy.

Senator GALLAGHER: So it goes through APRA to ASIC?

Ms Davis : The resourcing is through ASIC. When you look at the APRA levy, you will see resourcing to all of ASIC, of which a portion relates to the SCT. That is not separately shown. In terms of our budget for last year, we disclosed in our annual report our expenditure. It was $5.2 million last year and we are currently working on what that is looking like for the forward year.

Senator GALLAGHER: So you have roughly a $5 million budget. When you are negotiating your budget do you do that through ASIC or directly with the government?

Ms Davis : I guess we do not negotiate our budget. ASIC has the obligation to provide the resourcing. Practically how that works is that we have discussions. Indicatively for next year ASIC has advised a budget of $5.1 million. We are still working with that, particularly in the context of the Ramsay review and whether there is a hard project deadline of resolving all open complaints by 2020. We are currently undergoing work to model what resourcing it would require to achieve that.

Senator GALLAGHER: I think I have picked up over the course of being in this role that there is some concern that the proportion of the levy that is collected is not passed on to the SCT to allow you to do your work in a timely way. I think there is acknowledgement that there is a backlog of complaints. Sometimes that is used as an argument to change the SCT, but the flip side of that argument has been that the resources have not necessarily be made available. Do you have any understanding of what proportion of the APRA levy should be coming to you as opposed to the budget that you actually get?

Ms Davis : I think the SCT has been very open in disclosing how many open cases we have and the time it takes to resolve those—and that is a direct consequence of resourcing. In terms of how the APRA levy works, what is visible to us is what is in the budget papers, the APRA levy papers.

Senator GALLAGHER: Could you elaborate on that.

Ms Davis : There is not a single line for the SCT by way of ongoing budget. In circumstances where there might be additional budgets—for example, last year, when there was an NPP, that was articulated specifically for the SCT but our ongoing budget is not separately shown.

Senator GALLAGHER: For example, where there is another budget measure of additional funds for APRA in this budget and it says it will be funded through the APRA levy, will you automatically get a portion of that not? Or do you not know?

Ms Davis : I suspect that is a question best directed to ASIC or Treasury.

Senator GALLAGHER: Okay. You do not have any direct negotiations with government around the resources available to you? You basically just have to accept what is given to you through—

Ms Davis : We certainly have a continuing dialogue with ASIC and Treasury around our performance and our resourcing. For context, whilst the SCT is established in the act as a decision-making body—literally the tribunal to resolve a complaint—we do not have a legal identity. As the SCT we do not employ people. We cannot enter into a contract in our own right. That is all captured by section 62 in our act, whereby it is facilitated through ASIC.

Senator GALLAGHER: How many staff are at the SCT?

Ms Davis : There are currently 32 staff.

Senator GALLAGHER: Who are they employed by?

Ms Davis : They are all ASIC employees. Again, under the act, it is a requirement that they are all public sector employees. That is facilitated through ASIC and they are covered under the ASIC enterprise agreement. But there are also tribunal members, who are ministerial appointments, statutory officers.

Senator GALLAGHER: There are a number of those?

Ms Davis : Yes. Following recent announcements earlier this year, there are about 21 part-time members and two full-time members—myself and the deputy.

Senator GALLAGHER: Do you have efficiency dividends applied to you?

Ms Davis : Historically, from my experience there, an efficiency dividend applies to ASIC and that flows through to the budget for SCT.

Senator GALLAGHER: If, ASIC gets, say, $121 million in extra resources, does that flow onto you?

Ms Davis : Last year, when there was an NPP specifically for SCT, it was earmarked. That it was relevant to us. If it is relevant to other ASIC activities then no.

Senator GALLAGHER: So your workload is pretty heavy at the moment. What do you estimate your resourcing needs to be to deal with the complaints and have them finalised by July 2020?

Ms Davis : We are currently undertaking that work following the recent announcements and looking at what that might be. So it is a little bit early to answer that exact question.

Senator GALLAGHER: Do you know when you will be finished that work?

Ms Davis : I expect the indicative simplistic modelling, based on what we know today, to be available at the end of June.

Senator GALLAGHER: Can you take that on notice. I would be interested in that.

Ms Davis : I can take that on notice.

Senator GALLAGHER: The SCT made a submission to the Ramsay review.

Ms Davis : Yes, we submitted both with the initial round of submissions and then following the interim report.

Senator GALLAGHER: What were your key points?

Ms Davis : Clearly, ours is a superannuation centric perspective. In terms of our submission, we were very keen to make sure that, where the nature of a superannuation dispute required the statutory type of backing, that was reflected. And that went to a couple of things. It was much broader than disputes; it went to the industry's ability to effectively pay death benefits. There is a working between our act and the SIS legislation that manifests, and the industry call it claim staking. That was an important one to be maintained. And then there is the ability in a multiparty scenario to be able to have determinations that are replacing the trustee decision and do not require a contractual agreement. More broadly, some of the complaints we get may require the input of information from people who are not parties to the complaint. For example, it might rely on information from an employer that those provisions were retained to be able to facilitate the resolution of superannuation complaints. That has been reflected in the final Ramsay report.

Senator GALLAGHER: I understand that it is a difficult position for you to be in. Some of the concerns you have raised have been addressed through the final model, the legislation.

Ms Davis : Yes. Certainly the Ramsay review recommendations have addressed them. To the extent that the exposure draft has recently been released, we are currently working through that and we will be contributing to the consultation process.

Senator GALLAGHER: All right. We will keep track of that. The fact sheet that Treasury released on the new AFCA exposure draft says: 'The government will ensure that AFCA has appropriate statutory powers to deal with the complexities of some superannuation disputes. This includes powers to join third parties to a dispute and to require the production of information documents in relation to a dispute. In retaining key statutory powers, the dispute resolution framework for superannuation will remain substantially unchanged.' Are you in a position to pass a view on that assessment?

Ms Davis : No, I cannot pass a view on that here today. As I said, we are working through that exposure draft and we will be submitting into the process.

Senator GALLAGHER: Budget paper 2, on page 162, reports: 'The additional resourcing to ASIC to monitor AFCA is also offset by a reduction of funding of $7.2 million over four years from 2017-18 associated with the SCT being wound down the no longer operating from 1 July. The APRA levy will be reduced accordingly.' What do you understand of this and how it will impact on the work that you do?

Ms Davis : I guess it aligns with the decision to close the tribunal by 1 July 2020. I can see that parallel. In terms of what it specifically means, I am currently in discussions with Treasury and ASIC regarding our funding.

Senator GALLAGHER: If you are to close off all the active open complaints that you have now, I thought the discussion would have been about additional resourcing to allow that work to be completed.

Ms Davis : Certainly in our submission to the Ramsay review we noted that, should the decision be taken to move to a non-statutory body—in effect, close the SCT—resourcing would be required to close out the open complaints. That is resourcing over and above current resourcing. The other thing to note there is resourcing to facilitate that transition. There will be additional tasks associated with that. That includes supporting consumers. At the moment, it is proposed that they have a choice around remaining with the SCT or going to the new body. That is a service we do not currently provide that would need to be resource. Also, in running the business in a wind-up sense rather than on an ongoing sense, decisions on how legacy issues would be undertaken and resourced would require some dedicated thought.

Senator GALLAGHER: All right. We will keep discussing this as the situation develops. Are you aware whether, under the AFCA model, there will be savings returned to the budget through the streamlining of—

Ms Davis : I am not aware of those details.

Senator GALLAGHER: Okay. That is something I should probably ask Treasury.

CHAIR: I have one question. I am seeking an opinion, and I am quite conscious of that. Do you feel that the new one-stop shop model is going to benefit consumers?

Ms Davis : I guess I would draw you to my earlier comments looking specifically at superannuation. The Ramsay review has recognised the unique nature of superannuation issues and recommended that legislated provisions be retained to enable their resolution. We are working through the draft exposure legislation at the moment to see how that will work, so it is too early to comment. The other thing to note there is that, at the moment, what is being released is the draft legislation. To the extent that the proposed AFCA is a company body and there are other aspects that are going to be covered—be it under the constitution, under terms of reference or some other corporate framing—those details are not yet available. So it would be important to consider the entirety of 'the new world' and it is hard to answer just in terms of one of the pieces.

Senator IAN MACDONALD: People complain that recent changes to superannuation legislation have adversely affected them, and some claim—I do not think they are right—retrospectively. Do you look into those sorts of claims and allegations?

Ms Davis : No. We do not have a systemic type of investigation. Where we will touch on it is where someone makes a complaint relating to their individual circumstances. A change in legislation may be a trigger for someone to engage in their superannuation and notice something. Where their experience is different from what they might have expected, they will come to us with that. But it is not a complaint about the legislation; it is a complaint about their circumstances and how it has impacted them. For example, if with the introduction of MySuper someone's default investment arrangement changed, that might be something that is different from what they would expect.

Senator IAN MACDONALD: You steer clear of defined benefit schemes, I take it?

Ms Davis : No, we have defined benefit schemes in our jurisdiction.

Senator IAN MACDONALD: Do you?

Ms Davis : Yes.

Senator IAN MACDONALD: Okay. What is your address?

Ms Davis : We are in ASIC's offices in Melbourne.

Senator McGrath: I think it is important to put on the record that, on 16 December 2016, the Minister for Revenue and Financial Services made 13 appointments to the complaints tribunal. These appointments continue the high level of skills and experience available to the tribunal, ensuring that the tribunal has appropriately qualified members to deal with the range of issues it handles. I am happy to table a list of those appointees once I find a printer.

CHAIR: It would be terrific if you could table that.

Ms Davis : They are all listed on our website.

CHAIR: I should have asked: are you happy for us to table your opening statement?

Ms Davis : Yes, definitely.

CHAIR: Thank you very much, and thank you very much for appearing before the committee today. You are free to go.