Industry Super Australia (ISA) has chosen the same day on which the Commonwealth Bank has announced a record full-year profit to question whether the major banks are doing enough to balance the interests of shareholders and consumers.
In doing so, the ISA has stated it wanted banks to be required to meet a “better off” test when it sought to cross-sell superannuation with other bank products.
The ISA has acknowledged the need for a strong, stable and healthy banking system but has questioned whether the banks themselves were meeting community expectations and has directly referenced the cross-selling of products such as superannuation.
“When a consumer walks into a bank, they should be confident that their needs and circumstances are being taken into account and they should leave better off,” the organisation said in a statement.
“Regrettably there is more than enough evidence to suggest that that this isn’t always the case — with scandals and institutionalised mis-selling stretching back years.”
“Further, there are concerns about the cross-selling of super to bank customers and the bundling of superannuation with discounted mortgages or bank accounts,” the ISA said.
“The cross-selling or up-selling of super should be subject to a ‘better off’ test. That is, the bank must ensure that the customer is better off than in their current super arrangements.”
The ISA claimed it was instructive that there was no clarity as to how compulsory super services operated within the vertically integrated banks and suggested there were concerns about conflicts of interest, related party transactions and the impact on fund member’s retirement savings.
“There is an obligation for a higher duty of care for superannuation because it is compulsory. Banks must meet this higher duty of care,” the ISA claimed.
