No common ownership issues in Australia

A 30% shareholding in an organisation is not a common ownership problem and given the Australian Competition and Consumer Commission (ACCC) ‘uncharacteristically’ says there is not an issue, there is no common ownership issues, according to AustralianSuper.

At a parliamentary inquiry, AustralianSuper chief executive, Ian Silk, was asked whether there would be a common ownership emerging if the superannuation fund had a 30% shareholding in an organisation.

Silk said: “From AustralianSuper’s point of view? Certainly not. We want that organisation that we have your 30% stake in to maximise its profits in a long-term and sustainable fashion to benefit the members of this organisation”.

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Silk noted that so far in the inquiry no bank or regulator had seen an issue of common ownership.

“This committee has had two of the big four bank CEOs appear before it and they saw no issue in relation to any adverse competition effects. You've had the head of APRA [the Australian Prudential Regulation Authority], senior executives from ASIC [the Australian Securities and Investments Commission], and most importantly, the ACCC, say precisely the same thing,” he said.

“It's an interesting field and there are different views on it. When we looked for empirical data, that seek to substantiate the views of those who say, at least, a substantial lessening of competition, we do not see it.

“I am mindful that when the chair of the ACCC was asked by the chair of the Joint Standing Committee on trade and investment growth earlier this month, was invited to propose any changes to the law to deal with this issue rather uncharacteristically, he said, ‘I'm very happy with the law on this issue, I wouldn't propose any changes’.”

Silk said top reason the industry fund did not engage with activity that people were concerned with that involved negative implications of common ownership was that it was illegal.

“It's illegal for one or more partners to get together and to approach an organised company, it will be illegal for the company to participate in that, and directors of the company have their own obligations under the Corporations Act – to act in the best interests of the company for a proper purpose,” he said.

If it were not illegal, Silk said the fund would still not engage in that activity as it would be to the long-term financial detriment to its members.

“Our investment process is a largely bottom-up process. On that basis, we want high performing organisations that are going to return good dividends with capital appreciation for the members of the fund,” he said.

“If we were to engage them actively or passively to your [Labor’s Dr Andrew Leigh] point in activity that all competitors in an industry, not be aggressive with one another, not seek to perform as well as they might with it – that would have a number of downsides, it would stifle innovation and stifle entrepreneurialism.

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Can't wait to read all the comments from financial planners bagging industry super funds after they read this article. Get a life and accept the fact that the majority of workers are invested in industry funds which are no worse than the retail funds you recommend (reports suggest they are better). The only difference, not all industry funds will deduct your ongoing fees from the member account and therefore you will have to rely on fee for service or the client paying you your monthly 'service' fee.

Easy tiger - we don't mean to upset you because of your beliefs. You are free to hold your beliefs as we all are - for how long is the question.

So if and adviser provides advice which allows for funds to be deducted from a super account under the sole purpose test, why do super fund trustees accross Australia with a fiduciary duty to its members have such a varied policies regarding this?

What is the rationale behind some funds 'not' allowing a fee to be deducted from the fund and/or restricting release only to advisers who work for certain employers?

I don't know - ask them - perhaps the trustee does not want the members fund to be depleted by adviser fees. Why don't you direct debit the clients bank account or just give them an invoice when they require your services. By the way I have no association with any super fund -I just love the way advisers hack into them without explaining why they are anti-industry fund, particularly when these funds produce good returns (and lets face it the reality is that the member wants good returns - not hairy fairly adviser speak)

Hello there Herewego.
Intra Fund Fees - "Why don't you direct debit the clients bank account or just give them an invoice when they require your services."
My guess is rather than answering, you will come back with an insult against Financial Planners or personal insult.

Invoicing the client is not as tax-effective when the advice is about super. Best to charge the super fund.

No but all Industry Funds will debit $$$$$ millions & millions of members funds each year via HIDDEN COMMISSIONS to pay for their Call Centre Jockeys to provide Intra Fund & General Sales Advice.
And most of these Industry Fund members don’t get any service or sales advice for these HIDDEN COMMISSIONS they are forced to pay.
Hardly an ethical position for Industry Super hey Mr Herewego.
But sure Industry Super bag the crap out of Real Advisers for 20 years about fees & commissions. Yet Industry Super are the biggest HIDDEN COMMISSIONS gouges in the Super Industry.
The ISA hypocrisy is astounding.

This is the perfect example - its all about fees - the fees advisers wont get directly from an industry fund but they will from a retail fund.

Are you prepared to say that working Australians should not be in an industry fund and they should always be invested in a retail fund via a planner? If yes why - it cannot be because of returns surely?

Yeah actually that is one part of it.
It's also about time for you to jog on as well.

Here we go Herewego, Industry Super appears to be doing well - if you believe what Industry Super tells you.
Can you clarify for me if any of the following or perhaps all of the following is correct?
- Highest returns in the Kingdom on any period they quote - is this correct?
- Balanced secure long-term investment strategy - is this correct?
- All profits for members - is this correct?
- Lowest Fees in all of the world - is this correct?
- Support of community via sponsorship of just about any football League through out the land - is this correct?
- Corporate Boxes for all the important people - is this correct?
- Affordable Housing for the poor - is this correct?
- Socially responsible investment strategies - gender and also fix up the Climate issues along the way - is this correct?
- Ability to fund advertising on TV, Youtube - you name it - is this correct? Media friendly coverage ensured.
- QANTAS Points for new members - was that correct?
- Free Product Advice - is that correct?
- In House Financial Planning subsidised by members - is that correct?

I know there is so much more Industry Super can do but i just can't remember them all - steak knives?
Seems Industry Super

And no - no one said that no one ever should be in an industry fund. It is actually very common to advise a client to retain their existing fund, or open a new fund (which sometimes is ISF) within financial advice where it is appropriate in meeting the clients objectives.

Remember financial advisers must adhere to Best Interest Duty. If you can't demonstrate a reasonable benefit from moving a client between one product and another then you cannot proceed with that recommendation.

It is disappointing that this is not well understood given the comments provided by Herewego who appears to be writing with intent to troll rather than engage in any meaningful discussion.

Herewego, it’s all about:
- Millions & millions $$$$$$ Industry Super take from members via HIDDEN COMMISSIONS. Please explain why your members have to pay these HIDDEN COMMISSIONS, with No Consent and No Opt Out ability. (Except leave the fund).
- Millions & Millions $$$$$$$ HIDDEN COMMISSIONS taken from Members accounts when they Do Not Receive Any Advice / Sales. Why are these Industry Super members paying Hidden Commissions for NO Service ???
Enjoy this massive rort whilst it last ISA.
Please explain how HIDDEN COMMISSIONS for No Service is in members best interest ???

An "ethical" FASEA employee perhaps?

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