Members can hit back by switching to a better fund
When it comes to trusting your superannuation trustees, it turns out you can’t always.
Trustees are supposed to act in fund members’ best interests but, according to the 10 days of Hayne royal commission hearings into the $2.6 trillion superannuation sector, time and again trustees of retail super funds behaved negligently.
They turned a blind eye to their members’ needs and favoured the hand that fed them, looking after their big institution’s bottom line.
As expressed by Michael Hodge, QC assisting the royal commission, trustees were “alone in the dark with your money”.
And some of them couldn’t be relied on to do the right thing. Instead, executives – often paid annual salaries of millions of dollars – plundered retail super funds.
They were conflicted and they focused on collecting revenue for the parent company, milking their clients and lining the pockets of financial advisers. The current estimate for the fees that nine institutions charged their clients for no service is $1 billion, according to Peter Kell, ASIC’s deputy chairman.
Well-paid experts on risk and compliance work for the financial institutions but the serious breaches of trustees’ duties apparently went under their radar.
The list of culprits includes NAB and its MLC business, MasterKey, which was in the witness stand for five of the 10 days. Suncorp, CBA, AMP, IOOF and ANZ also appeared.
The two regulators, APRA and ASIC, failed to protect consumers, preferring to take a softly, softly approach with the big institutions.
One of the lowest acts was the revelation that Colonial First State lobbied the federal government to keep commissions paid to financial planners for people in the pension phase rather than stop them.
“How was it in the interest of members to grandfather commissions from superannuation to pension?” Hodge asked CFS’s Linda Elkins.
One way that consumers can protest against these badly behaved institutions is to take their savings out of the funds that have been named and shamed at the royal commission.
The line-up is public knowledge and Australians are free to move their super. There are plenty of low-fee, strongly performing funds with good governance.