Planners off ISA agenda as it targets banks

financial-planning/banks/ISA/PC/productivity-commission/industry-super-australia/

17 November 2016
| By Mike Taylor |
image
image
expand image

Financial planners and financial planning dealer groups are no longer the super-switching bogeymen of the industry superannuation funds, with Industry Super Australia (ISA) now pointing the finger squarely at the banks and general advice.

The ISA's submission to the Productivity Commission (PC) review into alternative default models strongly urges retention of the current default funds under modern awards model and it has urged the PC to be careful in assessing the arguments of the banks.

Referring to the "sales-driven switching", the ISA submission stated that "among those who do intentionally switch funds, this is substantially attributable to the sales efforts of vertically integrated for-profit providers".

"This was initially undertaken via financial planning networks. Since the Future of Financial Advice Reforms, for-profit providers are increasingly using "general advice" direct institutional sales (i.e., cross-selling of superannuation by bank staff)," the submission said.

It said that while various legislative protections were in place to promote the best interests of members and prevent inappropriate behaviour such as inducement or misleading conduct by providers toward employers, there was little evidence to suggest such protections were routinely enforced.

"That the processes by which most workers join and contribute to a default fund does not function as a ‘market' is evidenced by the fact that while retail funds have on average underperformed relative to most not-for-profit industry funds in terms of net returns to members, they continue to secure a substantial part of the industry, and charge significantly higher fees or margins," the ISA submission said.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months 3 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months 4 weeks ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

5 months ago

ASIC has suspended the Australian Financial Services Licence of a Melbourne-based financial advice firm....

1 week 6 days ago

The corporate regulator has issued infringement notices to three AFSLs whose financial advisers provided personal advice to a retail client while unregistered....

2 weeks 4 days ago

ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test....

3 weeks 2 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND