Financial Services Council initiative on super occupational exclusions

THE Financial Services Council (FSC) is initiating a process to consult with the superannuation and life insurance sectors, consumer advocates and other stakeholders with the aim of removing exclusions based on occupational classification within default group life insurance policies in MySuper.

The Federal Government’s ‘Your Future, Your Super’ reforms introduced an important consumer protection to ‘staple’ superannuation members to their fund, so that they take their account with them from job to job.

Stapling was a recommendation of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the Productivity Commission’s report into the efficiency and competitiveness of the superannuation system. The FSC strongly supported the implementation of stapling as it would prevent the creation of duplicate accounts that cause the erosion of superannuation savings.

In a small number of instances, however, superannuation members can be stapled to a MySuper fund that has default group life insurance that contains exclusions based on occupational classification. In a small number of instances when an employee moves between occupational classifications, at time of claim they may find themselves unable to claim against their default insurance coverage in the MySuper product.

This concern was raised by stakeholders during parliamentary debate and the FSC and life insurance industry agreed that it was in the best interests of consumers to design a solution, now that stapling is legislated to take effect from November 1, 2021.

As part of this process the FSC is seeking feedback on the options outlined in the consultation paper to implement this solution. The FSC said it would also consult with the Australian Competition and Consumer Commission (ACCC), Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).

The FSC today issued a policy proposal that the life insurance and superannuation industries could implement to address this issue. Stakeholders are being encouraged to provide feedback by Friday, September 3, through This email address is being protected from spambots. You need JavaScript enabled to view it..

The policy proposed is at: https://fsc.org.au/resources/2242-fsc-occupational-exclusions-consultation-paper/file

 

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