Banks should not claw into super: ISA

20 March 2017

Industry Super Australia (ISA) has used a damning report by the Australian Securities and Investments Commission (ASIC) on how large institutions oversee their advisers to warn against the big banks’ further spread into superannuation.

ISA referred to a report released on Friday, which highlighted the institutions’ failure to report breaches and non-compliance by advisers to ASIC in a timely manner.

The report said 26 financial advisers had been banned by ASIC under its Wealth Management Project, while over 1,300 customers had been compensated $30 million.

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ISA chief executive, David Whiteley, said ASIC’s report cast a shadow over banks’ efforts to increase market share in compulsory super.

“The banks and their subsidiaries have a deeply entrenched sales culture that runs counter to consumer interests and is clearly incompatible with the public policy objectives of compulsory superannuation,” Whiteley said.

“The findings highlight persistent behavioural problems within the wealth management arms of the big banks. These findings warn against greater bank involvement in the compulsory superannuation savings of millions of Australians.”

ISA also noted that in October 2016, ASIC had reported that under the “fee for no service” scandal, over 27,000 bank customers had been compensated, with a further 175,000 estimated to come.

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I think it is a bit rich for the ISA to get on their high horse about this. Their objective is to do exactly the same thing as the banks, i.e. profit from getting their grubby hands on our money. And they wonder why SMSFs are becoming the preferred wealth creation vehicle for most Australians. At least with the banks they can offer some sort of planning services & some sort of broader product offering, i.e. non-super managed investments (despite APL limitations and obvious vested interests). Industry funds can do even less for prospective clients - except for just 'housing' super investments - so I don't see how they can believe to really have an impressive service offering of any relevance to HNW or SMSF investors.

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