Political advertising the democratic right of super funds

7 November 2018

Industry Super Australia (ISA) has mounted a strong defence of the ability of superannuation funds to finance political advertising, arguing that it fulfils a vital democratic function and would be almost impossible to prohibit.

While the Australian Securities and Investments Commission (ASIC) has told the Royal Commission that there is probably little value in advertising default funds, the ISA has used its submission to argue that “industry funds are subject to constant attack by retail funds”.

“The trustees of those retail funds, or the firms that own those funds, regularly lobby government for changes in the regulatory framework,” the ISA submission said. “Trustees of industry funds are of the opinion that some of these changes will likely cause significant harm to fund members. Political advertising is undertaken to prevent this harm from occurring.”

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The ISA’s submission to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry said that changes to regulations concerning superannuation funds had the potential to significantly reduce members’ retirement benefits.

“It is entirely appropriate, if not obligatory, in those circumstances that trustees both inform members of the proposed changes and take steps to prevent them occurring,” it said.

“… any prohibition on political advertising is likely to be difficult, if not impossible, to implement in practice,” the ISA submission said. “Political advertising is in substance a form of political lobbying, and there will always be political lobbying (of some form) with politicians or senior departmental staff. It would be impossible to seek to prevent such communications from occurring.”

It said any prohibition on political advertising by trustees of superannuation funds would most likely be inconsistent with the constitutional freedom of communication on matters of government and politics.

“Communication on matters of government and politics is an indispensable incident of Australia’s constitutional system of government,” the submission said.

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I can't be reading this correctly? The ISA are admitting to political advertising. But wouldn't this automatically be a breach of it's trustee duties? How can it judge the political desires of 1M members. It accuses the Retail funds, but they are just advertising their products, not some idealogy.

Hence you can use the exact same rationale not to "ban" ongoing advice fees, where a client wishes to pay for them. It's their democratic right. These Unions are all the same. One rule for them, but not for everyone else.

The SIS Act needs a major clean up. You can drive a truck through it, and the Union Funds have a well worn path they use to do it.

Go ahead and fund all the political advertising you want, no problem. Just don't dip into member funds to pay for it.

Really... where else would they get the money from????

So the ISA has a right to pay for political advertising but who's money are they using ?
If it's the members, how many are consulted and give approval for their funds to be used for political advertising.
How much is used or are their no limitations on how much the ISA can gouge out of their unsuspecting members.
It's obvious, that if members are not consulted and don't matter, then why should the ISA care how much money they spend that used to belong to their members.
The sooner the Royal Commission deals with these charlatans, the better.

The Royal Commission is toothless when it comes to Industry Super Funds. All of the exhibits of wrongdoing used against, mortgage brokers, financial advisers, the banks and insurance companies were obtained from ASIC audits and investigations. Peter Kell was asked during a productivity commission inquiry earlier this year if ASIC has ever audited financial advice provided by Industry Super Funds. His answer was NO!. The Industry Super Funds seem to be a protected animal so the Royal Commission will do nothing to them.

Contrary to the rhetoric put out by retail funds and others Industry Super Funds are not Union Funds. The Boards of Industry Super Funds and made up of both Unions and Industry Bodies as well as some Independents.
If ever there was an example of what can be achieved when Unions representing Employees and Industry Bodies representing Employers work together to achieve great outcomes for all parties, Industry Super Funds has to be it.
Investments being made into Australian projects and other things using employees retirement savings with returns going into the accounts of fund Members rather than the pockets of overseas shareholders and greedy bank executives.
ISA has every right to stand up for the interests of Industry Fund Members against the relentless, often subliminal, political rhetoric and advertising from the retail funds and the greedy banks. Given what has come out at the Royal Commission one would half expect that part of the industry to be at least a little contrite for a short period of time, but is seems that they figure attack and the distraction it causes is the best form of defence to avoid public scrutiny of their atrocious behaviour.

No Bill they do not have every right to use the money in that way. The law is clear, it must be in members interests. How can they make the assumption that every member wants that political position. They can't, that's why politics has no place in what is a financial decision.

while those funds direct tens of millions each year to fund the Labor Party / Greens, without disclosing this rake off to their members. lol

Pretty extraordinary situation here for you, maintaining a left bias when Labour have vowed to turn your mortgage broking business into full fee for service, no upfront no trail.

Nothing wrong with super funds lobbying Governments. However when you give/pay commissions/donations to just one political party in order to manipulate legislation for your own funds gain and not directly for the benefit of your members than that is a corruption.

Here we go again.
Between 2013-14 and 206-17, Trade Unions received $18,438,516 from industry super funds.
Top 5 biggest union recipients were:
CFMEU $2,884,168
United Voice $2,386,164
ACTU $2,050,363
AWU $1,796,158
AMWU $1,495,898
In addition to political advertising & donations, sports team sponsorship and promotion, the industry super funds have a major issue in their responsibility to adhere to the Sole Purpose Test.
They fight like a union, dirty and lowdown to achieve their mandate and will justify anything at all to push their agenda at all costs. Whether it is blatantly misleading advertising or the provision of advice over the phone to members without having to provide the required compliance process, it is at the point where they need to reigned in regarding the Trustee responsibilities to their members.

If Bill Ellerton and his mates at the Industry Funds stopped taking all the money "donated" to Unions, "sponsorship" of sporting teams (and long lunches at the Tennis with employers and mates) then the Industry Funds would make a good "profit". Can't have that - perhaps spend more money at the Tennis next year - why not take you wife.

The Royal Commission has not uncovered any evidence of money being diverted from Industry Super Funds to political parties, which would clearly be illegal and immoral. There are no river of gold, just rivers of lies from the retail funds and political extremists.
I shouldn't have to remind people that the Royal Commission HAS uncovered evidence of greedy banks and others stealing money from the accounts of dead people which is illegal, immoral and shameful.
I'm not sure the Commission has really investigated in any real depth the corporate sponsorships, long lunches for pollies etc that have very little if any benefit to the Members of retail funds.
The results speak for themselves. Most (not all) industry funds are delivering far better results than retail funds and the ISA has every right to invest in lobbying programs, not political donations, which protect the overall financial interests of Industry Fund members.

Bill, you are an employee of First Super. ( a member of Industry Super Funds).
Please don't complicate the discussion as you are paid by First Super and you cannot and will not be able to provide an unbiased viewpoint. Irrespective of any evidence provided, you would defend the current processes.

The legal principals that apply to the trustees of a superannuation fund are quite clear. Under the Superannuation Legislation Amendment (Trustee Obligations and Prudential Standards) Act 2012 (Cth) the trustees of a superannuation fund must act in the members best interest. In its current form the best interest covenant requires a superannuation trustee "to perform the trustee’s duties and exercise the trustee’s powers in the best interests of the beneficiaries". What does that mean? Well s 601 FC of the Corporations Act 2001 (Cth) provides an answer. The duties of a responsible entity under s 601FC of the Corporations Act 2001 (Cth) include to “act in the best interests of the members and, if there is a conflict between the members’ interests and its own interests, [to] give priority to the members’ interests”. Therefore it is clear that the trustees of a superannuation fund owe a legal fiduciary duty to the members of the fund to act in their best interest. A superannuation trustee that authorizes the funding of political advertising is very likely to be in breach of their fiduciary duty obligations. You have no idea what you are talking about Bill. Your statements are motivated by your political bias and not from looking at the legal facts.

Yes, the left wing pro-Union Melbourne Super club did fail to ask detailed questions about tens of millions of annual payments to Unions, which are freely available at www.andrewbragg.com/supercheck/ . The BRC has been a sham.

Bill, taking a little from everyone and giving "interfund advice" to a few who ask for it - is that a "fee for someone else"?

Hi Bill Ellerton, you must have missed this headline then mate REST continuing to deduct insurance premiums when a person was no longer covered by insurance. I think this is a lot worst than AMP paying out benefits to customers and giving them a refund for the premiums. but keep loving the industry funds.... How many industry funds have been investigated by ASIC = 0 but can't be anything bad going on there just breach of Sole purpose test since they introduced the rule nothing to see here...

Costello said the misconduct involved REST continuing to deduct insurance premiums when a person was no longer covered by insurance.

Industry funds do this all the time they say it is the Customers responsibility to update the industry fund on occupation changes and because they didn't they are no longer covered sorry.

Despite internal concerns and customer complaints since at least 2016, AMP continued to deduct premiums from some superannuation accounts after being notified of the customer's death, with the intention of refunding them when the death benefit is paid out.

Below is what you are referencing which I'm sure you have not read the report but only a headline
That the AMP did charging for insurance is an industry wide standard and not out of the norm that premiums are taken until the claim is completed. Then refunded with the insured amount this is the same way Income Protection claims current work to this day

Under questioning by commissioner Kenneth Hayne, Mr Sainsbury admitted the refunds do not include the extra money that would have been earned if the premiums had not continued to be taken out of the superannuation accounts. The same goes for industry funds as well. working out price differences is a nightmare I would love to see this argument in a falling market does this mean the company pays no premiums back because the market has gone down and that would mean that you would have lost this anyway lol

If a life company failed to deduct premiums before a person died, the policy would lapse, or the firm has extraordinary ESP powers about when someone will die. The premiums from AMP was the most ridiculous thing to come before the BRC. It's credibility went down the toilet after that one.

What the media should be doing is making a register of all the people employed by the current BRC & do a review of their public personal statements about industry issues. Their degree of bias might quickly be thrown into question if it this exercise was conducted.

I'd say a 'community standard' would be that the industry fund that provides the insurance can see when contributions stop coming into the fund. That would indicate that they are no longer employed so the insurance is not in force. They could then stop deducting the premiums. But that would reduce the profit share arrangements as the claims as a portion of premiums would go higher. Tell me again why it's ok for them to receive commissions and not advisers? I don't pay commissions to industry funds. Should I run an ad campaign?

that is not a good option as we recommend clients with health issues might keep some of this type of insurance in super funds which are not receiving contributions. They are retained has the client can't get new insurance with another company that wont cover them doing what you are suggesting would put a client at a large disadvantage being forced into a fund for full investments which might not be performing and also what happens when they have two or three which the client wish to keep.

plus the greasy lawyers can advertise no win no fee and charge clients 40k to 80k to help them make a tpd claim :p no advisers I know charge for claims service.

Bill, wasn't your sister a former AXA/AMP Super Fund Trustee back around 2010?

No, my sister was a social worker before retiring. You clearly don't have clue.

Instead of democratic rights garbage, why don't they is simple English, explain clearly how political advertising meets the sole purpose test? It's that simple. It either meets that definition or it doesn't. I would expect they will be able to produce a table showing how the value of the dollars spent adds to a Member's account, on a balance of say $50,000.

Is it not also the "democratic right" of members of an Industry Super fund to be consulted in regard to the spending of their retirement savings for political advertising (and related snouts in the trough siphoning of funds to ISA/Union funds vested interests).
As a reasonably educated person, I must admit to being somewhat confused by this commentary- “Communication on matters of government and politics is an indispensable incident of Australia’s constitutional system of government,” Which highly paid legal boffin within ISA came up with this meaningless diatribe- Please explain?

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