The Financial Services Council (FSC) has rebuffed claims by Industry Super Australia (ISA) that removing the MySuper 'quality filter’ would lead to unreasonable search costs for employers.
Echoing the FSC’s submission to a government inquiry, FSC senior policy manager Blake Briggs said the 'anti-competitive’ nature of the current arrangement was to the detriment of consumers – without benefiting employers.
He said claims made by ISA chief executive David Whiteley that opening fund options would increase red tape and search costs for employers are “completely wrong”.
“Under the FSC proposal, any employer can continue to pay into the default MySuper fund they currently use, so that means there is no search cost – zero, none whatsoever,” he said.
“They can continue to use their current arrangements until they want to change voluntarily.
“It is completely wrong to say there are search costs, when you don’t have to do any searching.”
Briggs said it is “inappropriate” to label the method of narrowing the pool of funds from 120 to between two and 15 a “quality filter”, as it unfairly favours industry funds and operates on incomplete information.
“To say that it’s a quality filter is entirely wrong, because to be able to determine between the quality of different products you would have to be able to understand the products and the Fair Work Commission just doesn’t have the expertise to fulfil that role,” he said.
He said while any superannuation product can apply to be listed on the MySuper default list, only registered organisations, namely unions and employer organisations, can make submissions to appear on modern awards, which further undermines consumer choice.
“Of course they are going to make submissions to support the funds that they own,” he said.
“Clearly biased, clearly anticompetitive – and there’s no way for other funds to compete and force other funds to improve their offering.”
