MEDIA RELEASE - 01 February 2013
Revised Code of Banking Practice brings improved rights for consumers
Today’s announcement by the Australian Bankers Association (ABA) highlighting changes to the ‘Code of Banking Practice’ showing improved consumer rights is welcomed by the National Information Centre on Retirement Investments (NICRI).
Consumers have for many years been concerned that banks in Australia may not act in their customer’s best interest and felt that banks need to be more transparent and fairer to consumers. The revision of code of banking practice sets out the commitment banks have made to their customers whether personal or small businesses.
The ABA state that the improvements to the code came after an extensive independent review and consultation with consumer groups and other relevant stakeholders which NICRI was involved.
NICRI, which provides free and independent financial information to consumers receives calls on a regular basis about banks, banking products and their rights when dealing with banks.
NICRI CEO Wendy Schilg says, ‘Enhancements to the code such as those that strengthen consumer protection and recourse, will help Australians to be confident that they will be treated fairly and transparently. This is especially important to our main demographic of callers who have retired or are leading into retirement and require reassurance that the banking industry is looking after their retirement savings.’
Changes to the code include, enhancements to processes involved when dealing with financial hardship, a commitment to provide low cost or low fee banking information when dealing with those who may receive Government Income Support or concessions, providing clarification of dispute processes including potential recourse and streamlining of banking for those in remote indigenous communities.
‘It is important that the changes enhance protection and assistance to those most vulnerable’, added Schilg. Those that feel that the code has been breached or that the bank did not meet the codes expectation have a right to complain to the organisation and if applicable, the external dispute resolution schemes available.
The changes to the code will come into effect by 1 February 2014 and according to the ABA, all it’s signatories have signed up and will implement the required changes to their systems, process and documentation by then.
NICRI supports any measures by the finance industry to strengthen consumer protection.
NICRI has a range of free publications available and consumers can call 1800 020110 number 9am to 5pm Monday to Friday for free independent information.
Contact: Craig Hall ph: 02 62809977 or firstname.lastname@example.org
To view the ABA media release click here.. http://www.bankers.asn.au/Media/Media-Releases/Media-Release-2013/Improved-Code-of-Banking-Practice
Superannuation potential changes/issues for future consideration
Listed below are some of the main superannuation changes which the Government has announced. Please note that some are only proposals at this stage and are yet to be made law. (Current 01/10/12)
- Low income superannuation contribution – The government will return 15% of concessional contributions annually ( representing the 15% contributions tax applicable to concessional contributions) up to a maximum amount of $500 to people with adjusted taxable incomes of up to $37,000 pa. Concessional contributions include employer contributions. The payment will commence based on concessional contributions made during the 2012/13 financial year with payment being made during the 2013/14 financial year.
- Concessional contributions - From 1 July 2012 the concessional contribution cap will be limited to $25,000 for all superannuation contributors. The indexation of this cap has been paused and is expected to resume from the 2014/15 financial year. The increased contribution cap of $50,000 for people aged over 50 with total superannuation balances of less than $500,000 has also been deferred until 1 July 2014.
- Future of Financial Advice (FOFA) reforms - The reforms announced in 2011 became voluntary from 1 July 2012 and will be mandatory from 1 July 2013. The reforms include a prospective ban on conflicted remuneration structures including commissions on the distribution and advice on retail investment products including managed investments, superannuation and margin loans. Information relating to the reforms can be found at http://futureofadvice.treasury.gov.au/content/Content.aspx?doc=home.htm
- Superannuation Guarantee (SG) - The age limit for contribution to superannuation under the 'superannuation guarantee' will be removed effective from 1 July 2013, requiring employers to contribute to superannuation for people over the age of 70 years from that date. The SG will also gradually increase from 9.0% to 12.0% from then until 1 July 2019. For the 2013/14 and 2014/15 financial years the increase will be 0.25% each year and from the 2015/16 financial year the increments will 0.5% per annum.
- MySuper - is still in the pipeline and is designed to be a more efficient/low fee default fund for employees. The requirements for this type of fund are yet to be finalised. It is proposed that ‘Mysuper’ funds will be available from 1 July 2013 and by 1 July 2017 trustees of super funds must have transferred all existing balances in a default members super fund to a ‘MySuper’ product.
- Super Concessional contribution tax increase for individuals earning $300k and above - The Federal Government announced in the May 2012 budget that it will increase the concessional contribution tax rate from 15% to 30% for individuals with an 'adjusted' income of $300k and above from 1 July 2012. The increase will apply to concessional contributions. Concessional contributions include Superannuation Guarantee (SG) and notional contributions to defined benefit fund, Salary Sacrifice contributions and tax deductible contributions. The Minister for Financial Services and Superannuation, Bill Shorten has stated that 'income' for the purpose of this measure will include taxable income, concessional superannuation contributions, adjusted fringe benefits, total net investment loss, target foreign income, tax-free government pensions and benefits, less child support. This measure has yet to have been passed in parliament. More details on the assessment process are yet to be released.
- Government superannuation co-contributions - In the Governments Mid-year Economic & Fiscal Outlook statement for 2011/12 it proposed a reduction in the amount of its co-contribution to take effect from 1 July 2012. The proposal reduces the maximum entitlement from $1,000 to $500 for the 2012/13 financial year. The lower threshold to receive the maximum co-contribution is to remain at $31,920. The upper threshold where no payment will be made is to reduce to $46,920. This proposal is yet to be legislated at the time of writing.
- Minimum drawdown amounts for account-based pensions/income streams – the government announced recently that temporary relief for minimum drawdown amounts applying to account-based pensions/income streams will be extended to 2012-13 and will remain at 75% of the normal minimum requirement (a 25% reduction).
- Online electronic service for individuals provided by the Australian Taxation Office (ATO) – SuperSeekers has been set up by the ATO to assist people to manage their superannuation contributions. It enables you to list active accounts to which contributions have been made in the last 2 financial years. Having provided identification it enables a check for any missing super (and gives balances) that the ATO may hold. This will enable you to consolidate superannuation benefits. This can also be done by phone with a self-help line by phoning 13 28 65 or by writing to the ATO. More detail can be obtained at http://www.ato.gov.au/content/33301.htm.
- Superannuation auto-consolidation – from January 2014 the ATO will facilitate the auto-consolidation of accounts with low balances. The ATO is to provide information to super funds such as details of lost accounts, eligible rollover funds, accounts with less than $1,000 where no contributions or rollovers were received in the last two years. Subject to review, this threshold may increase to $10,000 in 2014. Members tax file numbers will be used as the primary locator within funds for the purpose of consolidation. For more information refer to media release no. 131 issued on 21 September 2011 by the Assistant Treasurer and Minister for Financial Services and Superannuation.
- Refund of excess concessional contributions – as announced in the 2011/12 budget, individuals who breach the concessional contribution cap by $10,000 or less can withdraw the excess out of their super and have them assessed at their marginal tax rate. This measure will only apply to first time breaches. legislation received royal assent on 27 June 2012
- Self Managed Super Funds (SMSF)’s – the government is considering changes to SMSFs with regard to transactions involving related parties, auditing requirements and the collection of statistics. Refer to the ATO website http://www.ato.gov.au/superfunds/content.aspx?doc=/content/00328213.htm&pc=001/149/030/003/003&mnu=0&mfp=&st=&cy
- Reporting of superannuation contributions on payslips – Employers are currently obligated to include certain information on payslips such as deductions from the employee's pay for superannuation contributions made. This should include the amount of the contribution along with the name and the number of the fund that the contributions are made or will be made to. The Federal Government announced in the 2011/12 Budget that further payslip reporting requirements for superannuation contributions will be made mandatory. Consultations on this proposal are ongoing.
NICRI has developed a Risk Meter which shows a number of common investment types and shows the potential risk, return and ideal time frames.