Jayson Forrest is the managing editor of Money & Life Magazine.
As a consumer advocate, Xavier O’Halloran leads a small team of professionals who champion the superannuation interests of Australians. He talks to Jayson Forrest about what it means to be a leader and how consumer confidence can be restored in the financial services industry.
The one thing you can never accuse Xavier O’Halloran of being is shy when it comes to defending the rights of consumers. And nor should he be, considering his role as Director of Super Consumers Australia, where he champions consumer advocacy in financial services, particularly within the superannuation sector.
Founded in 2013 as the Superannuation Consumers’ Centre by CHOICE to help engage Australians with their super, this not-for-profit consumer advocacy organisation was renamed Super Consumers Australia (SCA) in 2019.
Today, SCA works closely with Government and stakeholders in the superannuation system to advance and protect the interests of low and middle income Australians. It also seeks to positively influence the superannuation system for all Australians through three key areas:
Campaigning and policy, where it uses stories and experiences from everyday Australians to focus on the biggest problems facing consumers with the superannuation system;
Investigative journalism to uncover the facts about issues people have with their retirement savings and provide practical advice to help reduce the complexity surrounding superannuation; and
Research and data analysis on fund performance, fees and insurance to support policy reform and make super easier for people to understand.
“Essentially, SCA works hard to keep the super industry accountable and fair, while making it more understandable and accessible to Australians,” says Xavier. “Research is the core of much of our work, which includes testing out industry and Government modelling, while helping to deliver better legislative outcomes for consumers.
“And as for me, well, I’m a vocal consumer advocate with a passion for making the complex simple.”
However, as a not-for-profit, Xavier admits that funding the five-person SCA team can be challenging. Current funding is provided via a ‘community benefit payment’, which is a negotiated outcome between the regulator and industry participants that have breached the law. But with that funding soon to expire, the Government has acknowledged SCA’s important consumer advocacy work and has committed to fund its activities for a further two years.
Making a difference
For a small team running on minimum funding, SCA punches well above its weight. Not surprisingly, Xavier is justifiably proud of the difference SCA is making in the lives of everyday Australians.
Some of its achievements to date include its joint advocacy work on reducing duplicate super accounts for individuals, of which Xavier estimates there were about 10 million, which has helped consolidate the super of Australians.
Another notable achievement has been work done to cap super fees to around 3 per cent, which has been particularly beneficial for people with lower account balances, ensuring their super is not eroded by fees.
“The reforms to come out of ‘Your Future, Your Super’, particularly with fund underperformance, were areas of reform that we strongly backed and advocated for. We conducted modelling that showed that these reforms would lead to huge improvements for consumers,” Xavier says. “And while we were not alone in advocating for these changes, it was great to see our work assisting in change.”
The next project on SCA’s radar is retirement planning.
Xavier explains: “The Retirement Income Review had a number of findings that pointed to the difficulty non-advised consumers experienced with their decision-making, as they planned for their retirement, and how that was leading to bad outcomes for many retirees. We’re currently working in that space in relation to how the industry can provide simpler consumer advice, with the aim of helping people achieve the right level of retirement savings for them.”
Drawing on industry expertise
Yet, despite some of its notable achievements with consumer advocacy, Xavier admits that when it comes to changing the entrenched views of Government and financial institutions for improving consumer outcomes, it can be challenging.
“To be honest, it’s very difficult,” Xavier says. “There’s a huge resourcing mismatch in this industry. The four major superannuation lobby groups alone spend about $40 million annually on lobbying. By contrast, SCA’s funding is one-fiftieth of that amount.”
Instead, the SCA makes best use of its funding to challenge the ‘big end’ of town by leveraging its research and modelling capabilities to test consumer outcomes on a range of issues, such as the cost of a person’s retirement by having multiple super accounts.
But SCA is not operating alone with its consumer advocacy, working closely with aligned groups and industry associations, including the FPA and the Financial Services Council (FSC), towards achieving shared outcomes.
“We try to draw on the expertise of a lot of industry associations, as we seek to understand how they form their position on issues, which also provides us with the opportunity to test our ideas and modelling against theirs.”
This includes working with the FPA and other industry groups involved in the advice space.
“I recently spoke to FPA Head of Policy, Strategy and Innovation, Ben Marshan CFP®,” says Xavier. “It’s beneficial for us to talk to industry associations, like the FPA, to better understand certain areas, such as the Compensation Scheme of Last Resort (CSLR). When groups have aligned interests, they can come together on issues and present a stronger, more united case to Government, which ultimately produces better outcomes for consumers.”
He adds: “Our approach for dealing with any consumer issue is to first engage with industry and see how we can work together to solve the problem. Only if the problem can’t be resolved by industry alone, will we then approach the Government to see how it can assist.”
Best interests of clients
As a people’s advocate in the particularly challenging sector of superannuation, Xavier takes a very non-traditional approach to leadership.
“Ultimately, our role at SCA is to hold Government, regulators and industry to account on behalf of consumers, and to get these stakeholders to recognise what it means to work in the best interests of all Australians. This means we often have to speak our truth to very powerful and influential groups about what the impact of their decision-making has been on consumers,” he says.
“When we work with these stakeholder groups, we prefer to take an educational role in relation to what appropriate consumer outcomes should look like across various scenarios. We want to help the industry learn and develop by focusing on the needs of consumers and super members.”
Leading any organisation requires a good mix of qualities, including focus, commitment, resolve and empathy. They are also some of the qualities that Xavier frequently calls upon as he works with Government and financial institutions to positively influence the outcomes for all Australians.
However, he believes the key quality that elevates any leader from good to great is “acting in the best interests of others”, which is a key tenet of the FPA’s Code of Professional Practice.
“In order to act in the best interests of others, you need to have a high degree of empathy and understanding,” says Xavier. “You need to be able to put yourself into other people’s shoes, by separating your own personal or professional interests. This will allow you to better understand the perspective of others, including what drives and motivates them.”
He adds that this facet of leadership is especially important for leaders in the financial services sector.
“Serving the needs of your clients and ensuring your decisions are always made in their best interests is not only ethically the right thing to do, but it’s also your legal obligation. I believe the best way of doing this is to simply put yourself in the shoes of your clients.”
According to Xavier, that aspect of leadership – whether you’re working as a sole trader or running a national network of practices – never changes, even during times of uncertainty like a global pandemic.
“We’re all in a big storm at the moment, but not all of us are in the same boat battling the storm. People are dealing with challenges in different ways, like remote working, home schooling and living in isolation. It’s times like now that leaders need to step up by being adaptive and flexible to changing circumstances,” he says.
“Again, you need to put yourself in the shoes of others, which means making allowances and adjusting your style of management to the conditions of those you are leading. You need to change your expectations around what you were doing before and what needs to happen now. This might include looking at the hours your team are working, creative problem-solving and encouraging more downtime for people to manage their mental wellbeing.”
Take the ‘original position’
Whether it’s a result of his senior leadership positions at CHOICE or with SCA, Xavier believes he has learnt a few things over the years leading advocacy teams.
“One of the things I’ve found working in financial services is the vast majority of people in the industry genuinely want to do the right thing by consumers. However, what is sometimes lacking with people or organisations is they don’t always know what the right thing to do is, or they haven’t put themselves in the shoes of consumers.
“That’s where we like to help, by stepping in and switching on the light, which helps these organisations rethink the consequences of their actions with consumers, who otherwise might not understand or be engaged with the system.”
While he is reluctant to offer any specific advice to the financial planning profession, Xavier says the type of advice that has always served him well is to act in good faith when working with other people – whether they’re clients, colleagues, friends or family.
However, he concedes the findings of the Hayne Royal Commission have eroded consumer confidence in the financial services industry, and he believes the only way of regaining that confidence is by restoring trust in the industry. And the key, he says, is by taking the ‘original position’ in how the industry collectively interacts with consumers.
But what does he mean by ‘original position’?
In explaining this ideal – which Xavier also credits as his approach to consumer advocacy and policy reform – he refers to American moral and political philosopher, John Bordley Rawls. Notably, Rawls’s theory of ‘justice as fairness’ recommends equal basic liberties, equality of opportunity, and facilitating the maximum benefit to the least advantaged members of society where inequalities may occur.
Rawls’s argument for these principles of social justice uses a thought experiment called the ‘original position’, in which people deliberately select what kind of society they would choose to live in if they didn’t know which social position they would personally occupy.
“Therefore, if we consider our behaviour or policymaking from this ‘original position’, it’s about coming to a solution that’s fair, impartial and equitable for everyone. And the only way to do that is by putting yourself in someone else’s shoes. Only by removing the veil of ignorance and separating ourselves from self-interest and biases, can we develop the right solutions and behaviours – whether that’s products, policy or processes – that truly benefit everyone,” Xavier says.
“That’s the technique I use when thinking about what good policy reform looks like for consumers. It’s about putting myself in that original position. And I believe it’s the same position the whole industry – regulators, financial institutions and Government – should hold itself to, particularly when it comes to looking after the best interests of clients.”
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