History shows that retail superannuation funds might be willing to flout the laws designed to protect consumers when choosing superannuation products, according to plaintiff law firm, Maurice Blackburn.
Citing a recent Federal Court case in which the Australian Securities and Investments Commission (ASIC) brought charges against Westpac and BT, Maurice Blackburn used a submission to the Senate Economics Legislation Committee to argue that the Government’s new default superannuation legislation could have potential adverse consequences.
“Choice of fund, whilst a worthy goal, comes with dangers,” the legal firm submission said. “Maurice Blackburn urges the Committee to ensure that adequate protections are in place for consumers, should a more open approach to choice be recommended.”
“Where choice is available, consumers are more open to the risk of targeted marketing campaigns by superannuation funds,” it said. “It is worth noting that the findings of the Royal Commission included a specific recommendation11 aimed at prohibiting hawking of superannuation products.”
Looking at the totality of the legislation, the Maurice Blackburn submission said the firm regarded the Government’s legislation as a missed opportunity to implement reforms to ensure employees “are not victims of the abdication of responsibilities in relation to the payment of superannuation by unscrupulous employers”.
It said that for this reason it was asking the Parliamentary Committee to consider embedding in the bill a legislated right for action for damages caused by an employer’s failure to make on time superannuation guarantee contributions.
The submission also calls for the imposition of a legislated obligation on employers to conduct due diligence over any default superannuation fund and “a legal obligation on employers to ensure any default fund they choose for their employees is appropriate to the industry and employee demographics”.