The Financial Services Council (FSC) is seeking a hearing at the Fair Work Commission (FWC) to challenge the validity of the expert panel’s constitution and its ability to proceed with the review of default superannuation funds.
Yesterday and following a series
of heated communications between the FWC and a number of parties, the FSC requested an urgent hearing to take place in front of the commission prior to the 28 April deadline for MySuper applications.
FSC CEO John Brogden said the aim of the hearing would be to allow parties to make submissions on the current constitution of the expert panel, which selects the MySuper funds eligible for awards.
The FSC in particular has consistently been highly critical of both the constitution of the panel and its purpose.
Two members of the panel were removed two months ago due to conflicts of interest that were bought to the attention of FWC president Iain Ross by the FSC.
Ross replaced the two with only single member, leading to accusations that the new panel was not properly reconstituted.
Until last Thursday, when he appointed himself to the board, Ross has not been swayed by letters from the FSC that request the process should be disbanded or that he explain his position.
“The extraordinary move by the Fair Work Commission President to appoint himself to the Expert Panel is not enough to remedy this issue,” Brogden said. “The Expert Panel must be validly reconstituted before the process can proceed. The process is fast losing the confidence of the industry and must be urgently remedied.”
The FSC has also requested a seven day extension to the 28 April deadline for MySuper applications so the matter can be resolved.
Brodgen added that he does not believe that the Fair Work Commission is the appropriate place for the selection of MySuper funds.
“APRA is the regulator responsible for authorising all MySuper products. It has credibility and expertise and would be better suited for overseeing the selection process.”
Many financial services organisations including the FSC and the Association of Financial Advisers (AFA) feel that the current selection process is anti-competitive and favours industry funds.
AFA COO Phil Anderson told Wealth Professional
that any fund should be eligible as a default super fund for an employer.
“Having Fair Work Australia involved in the selection of funds is inefficient. If APRA has approved a fund as a MySuper fund then it should be good to be a default fund,” he said.
But Industry Super Australia (ISA) has launched a campaign to urging the government to ignore “the banks” proposal to remove the filter, and imploring them to rule out threatened legal action.
“The major banks oppose a quality filter, instead preferring a free-for-all where they can approach their business banking clients and encourage them to select the bank super fund as the default for their employees. This is clearly fraught with potential conflicts of interest,” said CEO David Whiteley. “[They] should re-think their approach to super, and seek to work with the super industry to establish a consensus on designing regulatory settings in the best interests of Australians who do not choose their own fund and who need financial advice.”
A statement by ISA asserted that the latest SuperRatings’ fund crediting rate survey has found the median industry superannuation fund balanced option outperformed the median retail fund balanced option over 1, 3, 7 and 10 years.