The Financial Planning Association (FPA) has finally called a spade a spade. It has accused the Industry Super Network (ISN) of using its political influence and the Future of Financial Advice (FOFA) processes to further its own interests in the financial planning space by eliminating competition from independent financial planners.
The claim, made by FPA chief executive Mark Rantall, reflects the views of a large number of planners whose views have been widely canvassed in Money Management and elsewhere. However, unlike Rantall, many of those planners have also suggested the Assistant Treasurer and Minister for Financial Services, Bill Shorten, is in league with the ISN.
Irrespective of where the Government or the Minister sit in terms of affiliations and allegiances, Rantall has made a very useful contribution in singling out the role of the ISN because it does, indeed, bear as many hallmarks of a political front organisation and a commercial umbrella as it does an industry lobby group.
In fact, ISN is a division of Industry Fund Services, which (along with Members Equity Bank) is a wholly owned subsidiary of Industry Super Holdings Pty Ltd – which is in turn owned by a number of industry superannuation funds. The degree to which members of those funds are aware of that ownership structure is uncertain.
Some key figures, such as current federal minister Greg Combet, have sat on the board of Industry Super Holdings Pty Ltd – but its most recent (2010) annual report reveals that the board consisted of former Treasury secretary Bernie Fraser, former Textiles Union boss Anna Booth, former Labor ministerial adviser Anne De Salis, former C–Bus chairman Sandy Grant, Macquarie Real Estate Equity Fund chairman Brian Pollock, former ANZ executive John Ries and industry funds stalwart and chair of Industry Funds Management, Garry Weaven.
Interestingly, leading business research house Ibisworld regards Industry Super Holdings as a competitor with the likes of Macquarie Bank, the Commonwealth Bank and Challenger, which raises the question of whether Commonwealth Bank subsidiary CommInsure ought to be granted a seat at the Government’s FOFA lobbying table alongside ISN.
While it is the job of the Australian Prudential Regulation Authority (APRA) to regulate superannuation funds, the structure, nature and activities of the Industry Super Network suggests that it ultimately falls outside the jurisdiction of APRA and, more likely, inside the jurisdiction of ASIC.
Equally, it is hard to know how the Australian Taxation Office would choose to treat the ISN for tax purposes – as a commercial subsidiary of a vertically integrated financial services conglomerate, or as an industry representative grouping?
Then, too, should the Australian Competition and Consumer Commission (ACCC) be concerned about the manner in which the structures which give rise to the ISN and the way it then operates potentially distort competition in an important industry sector?
None of these issues have come even close to being addressed in any recent inquiries, and the ISN continues to wield its influence with seeming impunity.
