Low-cost products defy Industry Super Network campaign
Low-cost products introduced over the past 12 months by major providers such as Colonial First State, BT and AMP may have served to undermine the assumptions and disclaimers underpinning the Industry Super Network's (ISN's) 'compare the pair' advertising campaign.
The Federal Opposition has specifically asked the Australian Prudential Regulation Authority (APRA) to check whether the new products have changed the underlying assumptions contained in the advertisements.
If the assumptions are proved to be wrong, then the ISN will be faced with the need to withdraw the advertising pending any corrections that need to be made.
The key questions around the ISN advertising assumptions were placed on the Senate Notice Paper by Tasmanian Liberal Senator David Bushby, who has raised a number of issues with APRA over its handling of industry superannuation funds, including whether the ISN advertising might be in breach of the sole purpose test or give rise to the possibility of future class actions.
In a written follow-up to questions he raised during Senate Estimates Committee hearings late last month, Bushby has asked APRA to "confirm that the assumptions (contained in the ISN advertisements) do not include the current mainstream low-cost retail superannuation products which currently account for approximately 50 per cent of net flows".
In doing so, Bushby cited AMP Flexible Super, FirstChoice Wholesale Super, and BT Super for Life.
He asked whether on the basis of the introduction of these new products, the assumptions attaching to the ISN advertisements "therefore might overstate the costs of retail funds which generate the long-term projection numbers included in the advertisements".
The Australian Securities and Investment Commission has also been asked questions in the Parliament relating to the industry superannuation fund advertisements.
The accuracy of the assumptions attaching to the ISN advertisements are crucial to them being sanctioned by the regulators. Opposition Senators have questioned whether those calculations have changed to take account of the newer retail products.
Last week APRA wrote to all registrable superannuation entities (RSEs) reminding trustees that they remained responsible for the activities of third-party fund promoters, including marketers.
While the APRA letter did not specifically mention the television advertising campaign, it was clear it fell within the fund promoter criteria.
The letter said that APRA expected fund trustees would exercise their own independent and informed judgement in relation to decisions concerning the fund, including on such matters as product design, investment strategy and the types of investments that the RSE licensee is to offer its members.
"RSE licensees should not be unduly influenced by the expectations or interests of third parties (which may possibly include the expectations or interests of Fund Promoters)," the APRA letter said.
AUTHOR
Mike Taylor
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