This urge to merge is anti-competitive says Paul Cahill
The current scramble to create scale among superannuation funds is anti-competitive, according to Club Plus chief executive Paul Cahill.
He said 'mergers' involving a larger and smaller fund were often takeovers disguised as mergers, where the dominant fund wiped out the weaker one.
"This urge to merge is actually anti-competitive," Cahill said.
Super fund mergers rarely fit perfectly and he questioned what the point was if the members were not better off, according to Cahill.
He said some of the recent fund mergers were illogical and pursued simply to create scale.
"Some of the mergers we've been seeing lately - I bet the board are sitting there going 'what have we done?'" Cahill said.
He said superannuation funds needed to approach mergers scientifically to marry up products and services, but it was not in members' best interests to dilute the fund's value proposition, which had run-on affects to community and engagement.
While most small funds had been approached by a larger one to discuss the possibility of merging, Cahill said, Club Plus with its 105,000 membership base had not had any discussions at all.
"Most funds have had coffee and a chat - we haven't had anything," he said.
Cahill said larger funds did not have anything to offer Club Plus, which was already a low-cost fund with its own services and ample investment options.
The fund wants to stay independent, with Cahill saying the only reason they would merge would be because of events outside of their control.
"Those sorts of things which are totally uncontrollable by us, and they're the things in the end [that] will determine whether or not we can remain independent … if it gets to the point where the Government says no, our state of policy is to have 30 funds, then I doubt we'll be an independent fund," he said.
AUTHOR
Staff Writer
Recommended for you
Adviser willingness is the key hurdle to the uptake of ESG matters by financial advisers; they should not feel afraid or embarrassed if they are less familiar with what clients are seeking.
In his first move since the acquisition by Count, former Diverger managing director Nathan Jacobsen has taken up a new leadership role in the financial advice space.
Medical grounds are no excuse for compliance failures as a Victorian AFSL is sentenced for failing to lodge annual financial reports.
The balance of ASIC enforcement activity is skewed towards civil rather than criminal cases, but the corporate regulator says it is seeking to redress this balance.
