Profit-sharing deals between superannuation funds and their insurers are being closely scrutinised by both the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority, a Parliamentary committee has heard.
Senior ASIC officials told a public hearing of the Parliamentary Joint Committee on Corporations and Financial Services that the arrangements are being scrutinised to ensure they do not entail conflicts of interest or run counter to members’ best interests.
Discussing flow-charts provided to the parliamentary committee which confirmed the existence of ‘profit sharing’ arrangements, ASIC senior officer, Ged Fitzpatrick noted that on each of the flow chart diagrams there was “potential for some form of profit-sharing arrangement, whereby there will be a rebate of parts of the premium back to the trustee”, SuperReview has reported.
“The conditions of those profit-sharing arrangements can be different depending on the structures,” he said.
Answering questions from Queensland Liberal member, Bert van Manen, Mr Fitzpatrick acknowledged that while details were scarce, there was a potential for conflicts of interest.
Mr Fitzpatrick said the regulator had done earlier work on member experience issues in super. “Now we are looking further up the chain in terms of how the consumer experience would roll through the trustee and through to the insurer and back again”.
“We do have concerns that it could give rise to a potential conflict but we don’t have any detail, yet, as to whether that conflict has operated in practice, and what the implications of that might be,” he said.