ISA points to bank super switching subterfuge
Industry Super Australia (ISA) has sought to use Roy Morgan Research data to claim Australia's major banks have been quietly switching tens of thousands of their customers into poorly performing super products.
ISA has claimed this is being achieved by ramping up direct advice sales channels that sidestep laws which would otherwise require them to act in customer's best interests.
The industry funds organisation claimed the Roy Morgan Research data had revealed a doubling in direct super sales advice from the big four banks between 2011 and 2015 that had also corresponded with a 40 per cent increase in the big four bank's super switching market share.
ISA's analysis of the Roy Morgan data comes at the same time as a Parliamentary Committee begins the process of interrogating the chief executives of the major banks.
Commenting on the ISA's interpretation, its chief executive, David Whiteley said the apparent flow of members from funds with better satisfaction and performance to inferior funds was "not what we would expect in a competitive market with informed consumers".
"These findings point to obvious market failure and urgent scrutiny is needed of the direct sales tactics employed by Australia's banks that sidestep Future of Financial Advice [FoFA] protections," he said.
"The figures show direct advice is growing quickly and at the expense of traditional channels including financial advisers.
"General advice direct from a bank does not need to meet the best interest obligations and it is likely the banks are using this and linked sales incentives to funnel customers into underperforming funds."
Recommended for you
Data and technology provider Novigi has acquired Iress’ superannuation consulting and managed services business from Apex Group.
AMP is to launch a digital advice service to provide retirement advice to members of its AMP Super Fund, in partnership with Bravura Solutions.
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
