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FSC counters ISA on alleged bank incentives
The Financial Services Council (FSC) has hit back at Industry Super Australia (ISA) claims that superannuation funds which are subsidiaries of banks give employers incentives to use them as default funds.
The ISA sought to underpin its claims by referencing a 2010 report commissioned by the Australian Taxation Office (ATO) and compiled by Colmar Brunton which referenced the provision of incentives such as lower fees, but also noted that 87 per cent of respondents were not aware of such incentives.
However FSC chief executive John Brogden said the ISA's claims regarding bank-related superannuation funds providing employers "egregious incentives to cross-sell products" was wrong in law.
"We have legal advice which confirms that superannuation funds and related parties cannot provide inducements to employers to secure a workplace deal," he said.
Brogden cited Section 68A of the Superannuation Industry Supervision Act which he said clearly prevented a related party of a superannuation fund — such as a bank — from paying an inducement to an employer to secure workplace default fund status.
"The only conflicts in superannuation are the deals made by unions and employer groups through the Fair Work Commission," he said. "The MySuper default fund selection process is not merit based or transparent.
"APRA is the quality filter for all superannuation funds. There is no place for selection of default funds in the industrial system," Brogden said.
The difference of opinion between the ISA and the FSC comes against the background of the FSC having taken legal action in the Federal Court to contest the validity of the Fair Work Commission's expert superannuation panel.
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