The Financial Services Council (FSC) has confirmed it will proceed with legal action in the Federal Court to challenge the validity of the constitution of the Fair Work Commission’s (FWC) Expert Panel.
It claims that panel that selects the default MySuper products was not legally reconstituted after the dismissal of two of its members due to conflicts of interest.
The conflicts of interest were brought to the attention of FWC president Iain Ross two months ago by the FSC.
Ross then replaced the two with only single member, leading to accusations that the new panel was not properly reformed.
Until last Thursday, when he suddenly appointed himself to the board as the third member, Ross has not been swayed by letters from the FSC that request the process should be disbanded or that he explain his position.
Calls by the FSC for a hearing in front of the FWC that would allow interested parties to make submissions on the current constitutions and ask questions were also rebuffed.
The FSC were instead directed to deal with the issue through legal means.
"We will apply for an urgent hearing in the Federal Court,” FSC CEO John Brogden said in response. “The industry deserves an opportunity for a proper hearing on the Expert Panel. The current Fair Work Commission selection process has nothing to do with merit. It is blatantly anti-competitive and would not be tolerated anywhere else in the economy.”
The FSC are not the only party concerned about the FWC superannuation default fund process.
The Association of Superannuation Funds Australia (ASFA) have also previously implored president Ross to clarify publicly why he considers the expert panel to be properly constituted.
And the Association of Financial Advisers (AFA) COO Phil Anderson told Wealth Professional
that having the FWC involved in the selection of funds is highly inefficient.
“The consequences of retaining the current [FWC] model is that we are unlikely to see a genuine opening up of competition in the default super model, which at present is very much in favour of industry funds,” he said.