June 20 2018
The well-heeled superannuation industry has too much sway on public policy and regulatory debate, according to consumer group CHOICE, which will today argue for proper funding for a specialist consumer organisation that will put the interests of savers above those of the funds management sector.
In comments to be delivered at a hearing today for the Productivity Commission’s inquiry into the $2.6 trillion super industry, CHOICE director Erin Turner will argue the need for an independent body that represents the interests of superannuation members.
“While CHOICE does our best to represent consumers in industry, regulatory and legislative debates about superannuation, we currently are only able to devote half the time of one policy adviser to this sector,” Ms Turner will say.
“In comparison, industry groups have large budgets and staff to influence the public policy decision-making. We need an equivalent body to represent the interests of members.
“Unless there is a strong organisation dedicated to representing consumers in technical debates about superannuation, we’ll continue to see industry groups dominate discussion and conflate their interests with the interests of their members.”
The PC’s draft report on superannuation found entrenched overcharging in the for-profit fund sector, a tail of underperforming trade union funds that refuse to merge despite it being in their members’ best interests, and an industry happy to preside over a system that acts as an “unlucky lottery” for many savers.
The recommendations to ensure only the best performing funds manage the savings of the least engaged members have sparked a backlash from super lobby groups such as the Association of Superannuation Funds of Australia, Industry Super Australia, the Australian Institute of Superannuation Trustees and the Financial Services Council. These industry lobby groups are believed to have about 100 staff, with more than 20 devoted to superannuation policy and research.
Karen Chester, deputy chair of the Productivity Commission, found funds were often acting in their own interests rather than those of their members.
ISA last year ran a budget of $22 million paid for by its 16 member funds. The FSC has a budget of about $9m a year. AIST charges its member funds just under
$10m for representation, while ASFA has annual revenue of about $13m.
The idea of a consumer-focused superannuation group was first floated as a contribution to the Cooper Review of the retirement savings system.
“Australia needs a consumer group that can focus on the highly technical area of superannuation and represent their interest,” Ms Turner will say. “This is common practice in other consumer sectors including health, energy and telecommunications.”