Navigating the proposed mandatory Service Standards

In January 2025, the federal government announced its proposal to introduce mandatory service standards for the superannuation industry. At TAL, we recognise the importance of working closely with our fund partners to navigate this new ecosystem.  

Drawing on our learnings from the implementation of the Life Insurance Code of Practice (LICOP) 2.0 in 2023, we recently held a Partner Roundtable with a number of fund stakeholders to discuss the implications of the new service standards and explore the collective steps needed to ensure a smooth implementation.  

The discussions uncovered several themes that will play a key role in shaping the future of service delivery within the superannuation industry.  

Political context  

Amid growing scrutiny of the superannuation sector, the government is introducing mandatory service standards for APRA-regulated superannuation funds to improve member outcomes and ensure high-quality service delivery.  

These standards will focus on three key areas:  

1. The timely and compassionate handling of death benefits
2. Fair and efficient processing of insurance claims
3. Clear, respectful and accessible communication with members.  

The aim of the standards is to support members during sensitive times and provide a dignified retirement for all Australians. However, the final structure of the standards is still uncertain, as debates continue over whether they will take the form of legally binding regulations or a structured industry code.  

This uncertainty reflects the broader political landscape in which policymakers, industry stakeholders and advocacy groups are negotiating the balance between stronger consumer protections and regulatory flexibility. 

The importance of clear definitions 

A central theme of TAL’s roundtable was the need for clear and precise language in the new standards. Ambiguous terminology in some previous regulatory frameworks has led to reporting challenges and instances of compliance breaches, stressing the need for well-defined, straightforward standards.  

Learning from TAL’s experience, the discussion centred around the importance of mitigating compliance risks and making sure that all parties can easily interpret and implement the standards. 

Tailoring standards for different cohorts 

Another key topic was the risk of having a one-size-fits-all approach to service standards. Superannuation fund members have diverse needs in differing circumstances, and the tailoring of service standards to different cohorts needs to be considered, in order to achieve fair and effective outcomes.  

One example from the implementation of LICOP 2 was the recommendation of financial advice for all lump sum payments. This proved to be impractical for low-value payments. 

The new service standards for the superannuation industry will need to be designed and applied flexibly to accommodate varied member needs, while meeting compliance requirements.  

Implementation challenges and cost 

During the roundtable, concerns were raised about the significant resources required to implement and monitor the new standards. The impact on administrators and workflow systems – and the financial costs associated with these changes – were key topics of discussion.  

While the benefits of high service standards in improving member outcomes are undeniable, it was considered to be equally important to balance these benefits with the practicalities of implementation. 

The role of qualitative data 

Alongside the importance of quantitative data in monitoring compliance and performance, roundtable participants also discussed the value of qualitative insights into member experiences and outcomes. Incorporating qualitative data would provide a more holistic understanding of service delivery and member satisfaction but also comes with greater challenges around definitions and reporting, so needs careful consideration. 

Governance and consultation 

Strong leadership and clear responsibility at every level of the organisation were considered necessary for properly implementing the new standards.  

To ensure the standards are realistic, feasible and beneficial for all parties, collaboration and communication will be needed between the industry, government and other key stakeholders such as the Council of Australian Life Insurers (CALI). Open dialogue will be the key to avoid implementing inappropriate standards for the industry. 

We look forward to continuing this discussion when more information becomes available. If you have any questions, please reach out to your Partnership Manager.