The Australian Government is currently holding an Inquiry on Financial Technology and Regulatory Technology, with Sargon participating both via a submission and presenting to the hearing. Our full submission can be read here:
The following provides a brief overview of our submission….
Superannuation is perhaps Australia’s greatest asset. Not only has the success of superannuation secured sustainable retirement outcomes for millions of Australians, but it has provided a source of deep and stable capital that has alleviated pressure on government budgets, reduced sovereign debt and provided financial security to nation-building projects across Australia.
Recent reviews, however, have found many systemic shortcomings, particularly related to compliance practices. In the wake of these reviews, trustees and superannuation fund managers must find a way to deliver significantly improved compliance outcomes, all at a lower cost. Regulatory technology, or RegTech, is the only viable solution that can simultaneously address both challenges.
RegTech’s potential to improve outcomes in superannuation can be drastically enhanced by the implementation of the Consumer Data Right to superannuation. The introduction of uniform standards and publicly available machine-readable product reference data will enable RegTech to deliver more efficient, productive, transparent and compliant practices across the superannuation industry.
Moreover, a move towards ‘Open Super’ will significantly accelerate the industry wide uptake of RegTech and FinTech, with RegTech essentially required as an enabling platform for Open Super, and FinTech solutions well-placed to maximise the improved efficiencies and member outcomes possible under an Open Super framework.
A virtuous cycle
In this way, RegTech and Open Super can create a virtuous cycle, with RegTech enabling the delivery of Open Super, in turn enabling improved financial literacy and engagement through FinTech platforms, consumer demand, competition, and innovation in RegTech, which in turn further improves engagement, reporting and compliance outcomes, and so on.
As such, RegTech and Open Super should be developed and implemented in tandem across the entire industry to deliver a true paradigm shift in the standards of compliance, transparency, reporting and regulation of superannuation.
Australia is now poised to take the crucial first two steps towards this new paradigm, namely, by:
mandating the use of current best-practice compliance and reporting standards across the superannuation industry – supported by best-in-class technology systems, and;
developing uniform standards and a framework for the promulgation of machine-readable product reference data in superannuation.
By doing so, Australia can seize the opportunity to implement truly world leading, 21st century regulatory and data infrastructure to underpin its already world-leading superannuation system.
The mandated use of RegTech and Open Super will deliver both more effective and robust compliance, reporting and regulatory oversight, and act as a springboard for further competition, innovation and growth within the FinTech and RegTech sectors. Additionally, transparent and publicly available machine-readable data will enable vastly improved financial literacy and engagement tools, and the delivery of truly neutral digital advice that is accessible to all – helping to bridge the advice gap and substantially improve outcomes for Australian retirees and the broader economy.
To read more, download Sargon’s full submission to the Senate Select Committee Inquiry on Financial Technology and Regulatory Technology below.