Banks' claims that the MySuper regime will adequately protect consumers "is absurd", Industry Super Australia (ISA) chief executive, David Whiteley believes.
Addressing the National Press Club, Whiteley, dismissed the banks' claims.
"The banks argue that the MySuper regime offers sufficient protection for consumers," he said. "This is absurd."
Instead Whiteley argued investment in long-term assets such as infrastructure and keeping the super safety net intact is the way forward.
Amidst praising the super system Whiteley expressed the need to retain the super safety net and suggested banks are the biggest threat to the super system
"The banks are lobbying to remove the safety net. They want to leverage their business banking relationships with employers to cross-sell employee default super arrangements, irrespective of the investment returns.
"This model will deliver less, not more, competition and is designed to suit the vertically integrated business model of the four major banks. The safety net has worked in that the predominant default funds have been the better performing funds. These have tended to be funds that have undivided loyalty to their members, such as industry super funds."
The ISA's proposals to extend the default super safety net are:
- Prohibit banks or related entities from providing default super fund services to employees where the bank is the main banking provider to the employer;
- Retail and bank owned super funds should earn their profits derived from default super. This can be achieved by permitting these funds to pay dividends to shareholders only when they have delivered median returns to members.
Adding that bank owned super funds should not be part of the default super safety net, but that "profits to shareholders should not be directly traded off at the expense of members who have been defaulted into the fund, ensuring competition in the super industry is focused on long term net returns".
Whiteley concluded emoving the default super safety net would "represent a significant gamble" as it is yet to be tested long term.
