Reports today suggesting the corporate watchdog is investigating bank-owned and other retail super funds over a fee gouge that could be worth more than a billion dollars has exposed serious flaws in superannuation bills before the parliament.
According to a report in The Australian – ‘ASIC Probes how Banks, Super Funds, Stiffed Customers by Billions’ (15/11/2017) - an investigation has been launched into why the big banks dragged their feet in transferring consumers into lower cost super products between 2013 and 2017 and potentially switched them into higher cost ‘choice’ super products.
A report into the delay by Rainmaker* estimated the conduct could have cost consumers $800 million to $1.8 billion in fees over the four-year period.
Industry Super public affairs director Matt Linden welcomed ASIC’s preparedness to stand up to and question the banks in the consumer interest.
“This fee gouge is another grave episode in a long series of shocking bank behaviour,” said Linden.
“In delaying the transfer of legacy super accounts, the banks potentially were again sneakily boosting their profits at the expense of the retirement incomes of ordinary Australians”.
“The not-for-profit industry funds, on the other hand, did the right thing, swiftly moving their members across to low fee products”.
“Yet, the Government has a bill before parliament that will see the retail fund boards - which oversaw the fee gouge - remain virtually unchanged while disrupting industry funds by imposing quotas of independent directors that, in the retail sector, have failed to protect member interests”.
"Furthermore, the bills seek to broaden choice to enable the banks to spruik their super products to even more unwary Australians without adequate disclosure and safeguards”.
"Finally, the bills fail to legislate heightened trustee obligations and outcomes test for choice super products that account for 80 percent of assets in the retail super sector”.
"The Government should withdraw its bills and follow the money trail from bank-owned and other retail super funds to shareholders and executives at the expense of their members’ retirement savings," said Linden.
In October 2017, Liberal MP and House Economics Committee bank oversight chair David Coleman described the Commonwealth Bank board as “extraordinarily incompetent”.
Yet, Superannuation Minister Kelly O’Dwyer has pledged to: “lift superannuation funds to at least the same standard as other financial services organisations like banks and life insurance companies” (AFR, ‘Super industry laughs at O’Dwyer’, 23 Nov 2016).
Industry Super is calling on the Parliament to reject the Government’s superannuation bills.
*An overview of the Rainmaker report which originally revealed these estimates is available here.
Matt Linden is available for interview. Media contact: Phil Davey 0414 867 188.
Industry Super Australia provides policy, research and advocacy on behalf of 16 not-for-profit Industry SuperFunds who are the custodians of the retirement savings of five million Australians.