Financial advisers guilty of 'gaming' default superannuation fund system
Some financial advisers have been as guilty as trade unions in seeking to "unfairly game" the system around default superannuation funds under modern awards, according to the Financial Services Council (FSC).
In a submission filed as part of the Productivity Commission review of the default funds under the modern awards regime, the FSC referenced research undertaken by Westfield/Wright which found that, "at present, the default superannuation system is shrouded in opacity and the influence of special interest groups/third parties through Fair Work Australia".
"Employers reported abuse by unions (and also financial advisers) to unfairly 'game' the default super system," the Westfield Wright findings claimed.
The research also confirmed the position of the FSC that the advent of MySuper funds as a result of the Stronger Super initiatives ought to put paid to the need for the current default funds under the modern awards regime.
The research found "the MySuper concept of standardisation, simplicity and fewer default options attracts overwhelming support".
Elsewhere in its submission the FSC urges that the new MySuper regime be used to enable employers to select any Australian Prudential Regulation Authority (APRA)-regulated MySuper fund as a default fund from 1 July, next year.
"If this were permitted, a designated Fair Work process would not be required, as an employer would be free to select any APRA-regulated MySuper product," the submission said.
"This approach has the benefit of removing conflicted industrial parties from selecting default superannuation funds which are approved without proper consideration by Fair Work Australia.
"To alleviate any burden on employers in selecting from many MySuper funds, the Government should maintain a MySuper website for employers and consumers," it said.
The submission said this approach would also remove another agency from the already complex superannuation system which involved APRA, the Australian Securities and Investments Commission (ASIC), the Australian Taxation Office and AUSTRAC.
"The more agencies involved, the higher the regulatory cost, the greater complexity and the likelihood of failings in consumer protection," it said.
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