ISA condemns banks on super fees
In the same week that the Parliament is due to consider legislation changing governance arrangements for superannuation funds, Industry Super Australia (ISA) has released new research which it claims points to the dominance and lack of transparency of the major banks and wealth managers.
The research, commissioned by the ISA and conducted by Rainmaker Information, claims the big banks are taking one-third of all fees paid to superannuation funds, suggesting the superannuation industry drew an estimated $30 billion in fees in 2014/15, with 91 per cent of that revenue paid to commercial wealth management businesses, and 33 per cent to the four big banks.
It found that only nine per cent was paid to not-for-profit trustees for administration and operations.
The findings have prompted ISA chief executive, David Whiteley, to point to a lack of transparency on the part of the major banks and wealth management firms.
"Fees are being generated a number of ways by the vertically-integrated wealth management arms of the banks, including platform superannuation, funds management, financial advice, group insurance and asset consultancy," Whiteley said.
"However these services are carried out within the banks' conglomerates with very little or no transparency."
He said this should be cause for concern for fund members and an area ripe for disclosure reforms by law makers and regulatory authorities.
"Compulsory superannuation is a foundation of our retirement income system, it should never be a honey pot for the big four banks," Whiteley said.
"Parliamentarians need to crack open the opaque structures of these vertically-integrated business units and subsidiaries and reassure the public that the banks are in fact prioritising the interests of super fund members before profits, as required by their fiduciary obligations," he said.
"In the interests of safeguarding Australians' retirement savings, all politicians should reject a Bill due to come before federal Parliament this week that would impose the faulty governance structure of for-profit funds onto not-for profit funds."
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