Government's ISN favouritism draws criticism
The Federal Government needs to start treating the Industry Super Network (ISN) and other elements of Industry Fund Services as what they really are - elements of a vertically integrated financial services conglomerate, according to the chief executive of the Financial Planning Association, Mark Rantall.
Rantall has told Money Management he has been disturbed by the ability of the ISN to pass itself off as a "consumer champion" when, in reality, it was the lobbying arm of what amounted to a vertically integrated conglomerate containing a bank, a funds management arm, a financial planning arm, and superannuation products.
He claimed the multifaceted nature of the ISN and other groupings falling under the Industry Funds Services umbrella meant they were being double-counted as stakeholders providing input into key Government policy decisions.
Rantall's comments follow on from statements he made late last month claiming the ISN was mounting an attack on financial planners as part of a broader strategy to gain dominance of the financial planning market.
His concerns about the amount of influence exerted by the ISN were reflected in comments by the Shadow Assistant Treasurer and Opposition spokesman on Financial Services, Senator Mathias Cormann, who said the Assistant Treasurer and Minister for Financial Services, Bill Shorten, had allowed the Future of Financial Advice (FOFA) legislative agenda to be hijacked by the ISN.
Discussing the original bipartisan recommendations of the Ripoll Inquiry, Cormann said: "Bill Shorten and the Gillard Labor Government allowed the agenda to be hijacked and, in effect, delayed by the ISN and the union movement".
"Let me be very clear here upfront. Industry super funds play an important role as part of the overall superannuation industry. They have a particular business model, focusing on a particular value proposition, which meets the needs of many Australians. However, the key here is that changes to the financial services and superannuation policy framework should be competitively neutral. They should not be designed to impose the industry super fund business model on the whole industry, or to help provide a competitive advantage for one segment of the market against another," he said.
"For somebody who says he is committed to removing conflicts from the financial advice industry, Bill Shorten seems particularly unaware of the need to manage the conflicted situation he finds himself in when making policy judgements in relation to financial services and superannuation policy issues," Cormann said. "The ISN was not able to convince Bernie Ripoll and his inquiry that there should be a mandatory yearly or biennial opt-in, or a ban of commissions on risk insurance - inside or outside super."
The chief executive of the Financial Services Council, John Brogden, also questioned the credentials of consumer group Choice - often aligned with the ISN, in terms of its stakeholder influence in the FOFA debate - referring to its commercial involvement in the so-called 'Big Bank Switch'.
He said the Choice involvement meant the group had a number of key questions to answer, particularly with respect to commissions and conflicts of interest.
AUTHOR
Mike Taylor
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