Harvey Russell
Head of Advocacy
Joseph Sorby
Executive Manager
19 November 2014

This presentation is given by a representative of Colonial First State
Investments Limited AFS Licence 232468, ABN 98 002 348 352 (Colonial
First State). Colonial First State Investments Limited ABN 98 002 348 352,
AFS Licence 232468 (Colonial First State) is the issuer of interests in
FirstChoice Personal Super, FirstChoice Wholesale Personal Super,
FirstChoice Pension, FirstChoice Wholesale Pension and FirstChoice
Employer Super from the Colonial First State FirstChoice Superannuation
Trust ABN 26 458 298 557 and interests in the Rollover & Superannuation
Fund and the Personal Pension Plan from the Colonial First State Rollover &
Superannuation Fund ABN 88 854 638 840 and interests in the Colonial
First State Pooled Superannuation Trust ABN 51 982 884 624.
The presenter does not receive specific payments or commissions for any advice given in this presentation. The presenter, other employees and directors of Colonial First State receive salaries, bonuses and other benefits from it. Colonial First State receives fees for investments in its products.
For further detail please read our Financial Services Guide (FSG) available at colonialfirststate.com.au or by contacting our Investor Service Centre on 13 13 36.
All products are issued by Colonial First State Investments Limited. Product
Disclosure Statements (PDSs) describing the products are available from
Colonial First State. The relevant PDS should be considered before making a decision about any product. Stocks referred to in this presentation are not a recommendation of any securities.
The information is taken from sources which are believed to be accurate but
Colonial First State accepts no liability of any kind to any person who relies on the information contained in the presentation.
This presentation is for adviser training purposes only and must not be made available to any client.
This presentation cannot be used or copied in whole or part without our express written consent.
© Colonial First State Investments Limited 2014.

Oct 2014
Govt response to
Senate Inquiry into ASIC
Nov 2014
FSI: Final Report
Late 2014 Tax
White Paper
Terms of reference released
Sept 2014
FOFA Senate
Inquiry: Report due
Dec 2014
Scrutiny of advice
Senate Inquiry:
Submission due
Early 2015
FSI: Govt response
July 2015
Scrutiny of advice
Senate Inquiry:
Report due
Late 2015 Tax
White Paper
Report Likely
2015-16
FSI: Introduce legislation
2016
Federal Election likely to be held
2014 2015
Sept 2014
PJC advice standards:
Submissions due
Sept 2014
Income stream consultation:
Submissions due
Late 2014
Welfare Review:
Report due
Early 2015
Stronger Super:
Reforms finalised
Late 2014
Stronger Super:
Consultation commence
Mid 2015
Stronger Super:
Reforms commenced
2016
Advice Parliamentary Inquiry
Financial System Inquiry
Stronger Super
Tax White Paper
Retirement Policy
Other

Parliamentary Inquiry
Streamlining FOFA legislation
Performance of ASIC
Professional, ethical and education standards
Scrutiny of financial advice
!
Reform
• Remove opt-in, best-interests catch-all & retrospective FDS
• Palmer United Party disclosure changes
• Public register of all financial advisers
• Office of the Whistle-blower
• No CBA Royal Commission
• Increased education standards, including possibility of Independent Board
• Broad scope, including consumer protection, conduct and Regulator powers

It’s been almost 20 years since Wallis
Capital allocation and economic implications
Super became a key focus

1997 x6
Superannuation assets are now over $1.8 trillion* around six times their level since the last
Financial System Inquiry in 1997
Can superannuation be a greater source of funding for the economy , including banks?
*As at the end of the June 2014 quarter. Australian Government - Australian Prudential Regulation Authority
(2014) Statistics: Quarterly Superannuation Performance (June 2014 interim edition issued on 21 August 2014).

1 2
Financial System
Inquiry terms of reference announced
Initial submissions to the Inquiry
Interim report Second round submissions to the Inquiry
Final report from the FSI Committee due to Treasurer
Dec
2013
Mar
2014
Jul
2014
Aug
2014
Nov
2014

Interim Report

Observations or policy options
Regulatory incentives to encourage the development and take up of income streams
!
Implications
Greater variety and demand for income stream products
Defaulting into income streams – MyPension?
Depending on income stream proposed, may impact level of voluntary contributions to super.
Practical difficulties with defaulting.
Compulsory income streams
Government-issued retirement income product
Restrict / tax lump sum withdrawals above a certain threshold
May reduce demand for advice in pre and postretirement
May crowd out the private sector and associated innovation
Issue likely to be deferred however lump sum taxes may impact voluntary contributions and trust

Interim Report

Observations or policy options
!
Implications
Raise minimum education and competency standards
Move towards a profession and greater integrity
Enhanced public register of financial advisers
Greater consumer visibility and the chance for advisers to differentiate based on their credentials
Renaming general advice as product or sales information
Clearer distinction between aligned and independent advisers
Greater consumer clarity
Greater consumer understanding. Advantages for both models.
Enhancing consumer access to effective, low-cost advice
Facilitate greater use of technology in delivery of advice and disclosure
Enhance ASIC’s powers Greater intervention powers

Interim Report

Observations or policy options
Super fees are too high when compared internationally
!
Implications
FOFA and Stronger Super and increased fund consolidation will continue to place downward pressure on fees. Auction system for fund selection?
Is vertical integration reducing competitive pressures and increasing super fees? Are the benefits flowing through to consumers?
Possibility of greater distinction between independent and aligned advisers
Is there an undue short term focus in superannuation and a move to passive investment management?
Move to more homogenous product design, restrictions on asset transfers (extend portability timeframes)?
Ban on direct leverage in super and concerns around SMSF operating cost levels
Statutory compensation scheme
Some members may reconsider direct property.
Need for greater trustee education or financial advice.
Increase moral hazard and impact PI insurance.

Interim Report

Observations or policy options
Industry-funding model for ASIC
!
Implications
May result in higher levies, particularly for ‘higher risk’ entities and individuals
Refine the scope of ASIC’s mandate and increase coordination via CoFR
Greater transparency on Regulator activities and decision making
Remove disclosure requirements that have proven ineffective and facilitate new ways of providing information to consumers
Increase consumer engagement and literacy
Accelerate competition between product providers
Subject product issuers to a range of product design (suitability) requirements
May reduce product innovation given limitation on features and design

Regulatory change is now business as usual
FSI will have a considerable focus on wealth management given the growth of superannuation
IFAs are well positioned