The Sedgwick Review released today does nothing to stop banks continuing to cross-sell their underperforming super funds to the public.
Although the review rightly addresses some of the unconscionable conflicted remuneration practices seen within the banking sector that have driven numerous ‘bank scandals’, it fails to address remuneration practices that are used to cross-sell superannuation products.
This failure to consider super in the review will allow the big banks to continue to cross-sell super in an attempt to get their hands on more workers’ super.
Industry Super Australia is concerned that poor outcomes for bank superannuation customers have the potential to undermine public trust in the superannuation system as a whole.
"The banks appear blind to the social policy objectives of compulsory super, which logically should be subject to stronger protections than other financial products", said Industry Super Australia chief executive, David Whiteley.
"The banks must address the cross-selling of compulsory super urgently. If not, the government must step in,” he said.
“It is a tall order to ask staff to both meet sales targets and genuinely serve customer needs when the products they are required to sell are designed to generate revenue and therefore may not be the best on offer”.
Mr Whiteley said cross selling of superannuation products to banking customers through general advice should be subject to a “better-off” test to ensure consumers are not disadvantaged by the switch.
"Australians shouldn't walk out of a bank branch worse off than when they walked in”.
"A comprehensive ban on sales incentives for staff and a "better-off test" are now required to protect the public from the cross-selling of compulsory super by banks".
“The ‘for-profit’ culture enshrined in the banks business model raises questions of the appropriateness of bank involvement in compulsory superannuation, given super is a mandatory savings system central to Australia’s long-term economic and social prosperity,” he said.
David Whiteley is available for interview. Media contact: Phil Davey 0414 867 188.
The opinions above are those of the author in their capacity as spokesperson for Industry Super Australia (ISA). ISA, the authors and all other persons involved in the preparation of this information are thereby not giving legal, financial or professional advice for individual persons or organisations. Consider your own objectives, financial situation and needs before making a decision about superannuation because they are not taken into account in this information. You should consider the Product Disclosure Statement available from individual funds before making an investment decision. Industry Super Australia Pty Ltd ABN 72 158 563 270, Corporate Authorised Representative No. 426006 of Industry Fund Services Ltd ABN 54 007 016 195 AFSL 232514 MED.