Consumer group Choice has renewed its call for a total ban on grandfathered commissions.
In a submission filed with the Productivity Commission (PC) inquiry into Superannuation Competitiveness and Efficiency, the consumer group has spared nothing in arguing for an end to trailing commission including a clear-cut suggestion to the PC that it recommend “that the Federal Government introduce legislation to ban grandfathered commissions.
The Choice submission strongly backed the direction of the PC’s draft report, but said it needed to go further in key areas and led off by putting trailing commissions at the top of the list.
“We support greater disclosure; at minimum consumers deserve to know what they’re being charged for any service,” it said. “However, this really is a bare minimum. A far better outcome would be to ban trailing commissions altogether.”
The Choice submission then cited the need to urgently reform the Insurance in Superannuation Voluntary Code of Practice.
It said that Choice had sat on the working group for the Code and that it was “our experience that the industry stripped the Code of its enforceability and removed many of the protections designed to end the erosion of accounts, particularly for young people”.
“Our view is that at this point the industry is incapable of meaningful reform,” the Choice submission said. “We agree there should be a regulator-led taskforce to improve the Code, but stress that this should be done in consultation with consumer groups.”
“We also see a strong need to adopt the co-regulatory proposals in the ASIC Enforcement Review and thereby enhance the role of the regulator in code development, monitoring and enforcement.”
“Finally, we encourage the Productivity Commission to explore options to give consumers a greater voice in debates about the superannuation system. We need a strong voice for superannuation fund members. The superannuation industry covers 15 million Australians who collectively own $2.6 trillion in assets. We need an independent and well-funded body that represents the interests of superannuation members.”