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Mem­bers can hit back by switch­ing to a bet­ter fund

Money Magazine Australia - - CONTENTS - SU­SAN HELY

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 (see page 70).

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 (see Money’s Au­gust cover story, “Add up to $337k to your su­per”).

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