BT Financial Group’s chief executive, Brad Cooper, has come out in favour of the much-questioned Productivity Commission’s (PC’s) superannuation report, supporting its key recommendation to have a panel select the 10 “best in show” funds and saying that strong funds should embrace the competition it would enable.
Cooper argued that while BT had originally supported an open market model to defaulting funds, the super system’s “deep design flaws that have serious consequences for consumers” that were highlighted in the report meant that the panel was now a good idea.
He pointed to the PC’s finding that 1.7 million accounts had been defaulted by industrial awards into poorly performing funds as such a flaw.
“The PC’s report … provides compelling analysis and has led BT to conclude that a different model [to the open market] is necessary to protect consumers from account duplication, underperforming funds and balance erosion,” Cooper said.
“The PC has confirmed that not only is the current default process ill-conceived, but that by design it is inefficient and directs many consumers into the around one-in-three default funds that perform poorly.
“The inquiry concluded that small and underperforming products should no longer be in the market and that government reforms are needed to enable permanent capital gains tax relief to facilitate fund mergers.”
Cooper said that funds that believed they performed strongly, had good governance and delivered good member outcomes should not be afraid of competition, and thus by extension should welcome the PC’s recommendation.
BT estimated that the best-in-show reform would benefit consumers $3.9 billion per year.