Industry funds point finger at platforms-based super
The industry funds focused Super Members Council (SMC) has drawn a clear line between MySuper and choice superannuation products in a master trust arrangements and those sitting on investment platforms.
In doing so, the SMC has made clear that its members have no interest in being roped into a broader funding base for the Compensation Scheme of Last Resort (CSLR).
The SMC has told the Treasury consultation on the CSLR exceeding it sub-sector cap, that recent failures such as First Guardian and Shield “underscore that the risks to members’ superannuation are concentrated around platforms, managed investment schemes and advice – and not default funds, MySuper and choice products”.
“These collapses are not isolated incidents. They starkly expose the urgent need for platform and MIS reform to elevate consumer protections or significant calls on the CSLR will continue to occur,” SMC said.
“However, expanding the CSLR to superannuation trustees would deviate from the scheme’s original policy intent. Any reform must balance consumer protection with system stability and the obligation to act in members’ best financial interests—particularly in sectors where such losses do not occur.”
“Additional calls on personal advisers to make up shortfalls triggered by collapses elsewhere in the sector also raise questions about the long-term sustainability of financial advice services and whether such costs align with members’ best financial interests,” the SMC said.
“Many super funds operate advice businesses as fully-owned subsidiaries, while others have commercial arrangements with external firms under an authorised representative licencing model. Drawing additional levies from the sector creates tension with the Government’s proposed financial advice reforms that are intended to make advice more affordable and accessible for fund members.”
“It is also worth noting that personal advice provided by super funds is mostly on an intrafund basis – limited to topics explicitly relating to their interest in the fund – and does not involve recommendations to switch into high risk externally managed products,” the submission said.
The SMC suggested that the Government could tap unclaimed superannuation that has reached its statutory limit to help fund the funding shortfall.
Ronald McDonald offering an opinion on nutrition.
Why do industry funds want to kill off their competition? Are they not already too large for the small market they operate in, and why would they want more members when they cannot service them as it is? Perhaps they could step back and realise that retail funds are doing them a favour by taking on the more hands on customers who use up so much admin time and resources. Industry funds can keep all the set and ignore members and the rivers of gold they create for little service in return. I cannot work out why they keep attacking platforms and SMSFs, when they are so large already and cannot place capital. Keep on treating people as dills who cannot be trusted with choice, and keep that cash flowing to those honest union overlords.
Time for a Royal Commission into Industry Super.
so SMC says that their advice is only really intra-fund, limited to topics within the fund – so not really financial advice or difficult to determine whether in the members best interest. Can’t have their cake and eat it too….? I wonder what they think about legal action that has been & is currently being taken by ASIC against their members and where one of their members who totally vaporized > $1+ Bn on an investment
Yeah they can potentially have their cake and eat it too. It seems that such an outcome maybe achievable in a place like Canberra.
I’d love to provide financial advice without any accountability.
I think it is weird that a super fund with >$100 billion in FUM doesn’t afford its members opportunity to appoint / remove board members. Meanwhile ASX listed companies are held to much higher standards of Governance (in my opinion).
I’m an adviser from semi regional Australia who had nothing to do with any of these failed funds.
But nonetheless I will be forced to pay into the CSLR.
If big super doesn’t have to pay because they’re not involved, why should I?
SMC’s position appears hypocritical.