A study commissioned by Industry Super Australia has claimed Australia’s major banks collect one third of all fees paid to super funds. The study, conducted by independent research firm Rainmaker Information, found that the superannuation industry drew an estimated $30bn in fees in 2014/15, with 91% of the revenue paid to commercial wealth management businesses. Major banks accounted for 33% of this, with only 9% paid to not for profit trustees for administration and operations.
“Fees are being generated a number of ways by the vertically-integrated wealth management arms of the banks, including platform superannuation, funds management, financial advice, group insurance and asset consultancy,” said David Whiteley, Chief Executive of Industry Super Australia.
“However these services are carried out within the banks’ conglomerates with very little or no transparency. This should be cause for concern for fund members and an area ripe for disclosure reforms by law makers and regulatory authorities.”
Whiteley said compulsory super should not become a “honey pot” for major banks, and said consumers felt anxiety around recent scandals in major banks’ wealth management divisions.
"Parliamentarians need to crack open the opaque structures of these vertically-integrated business units and subsidiaries and reassure the public that the banks are in fact prioritising the interests of super fund members before profits, as required by their fiduciary obligations,” he said.
“Meanwhile, the banks and their super funds have been running a major lobbying campaign for some years to dismantle the not-for-profit superannuation sector and redesign regulations to suit their profit-making business models.”
Whiteley urged politicians to reject a bill due to come before Federal Parliament that he said would impose the governance structure of for-profit funds onto not-for-profit funds.
Compulsory super could become a “honey pot” for major banks, a new study has claimed.