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Category: Superannuation / Banking / Consumer Finance / Business, Economics and Finance

Industry Super releases the hounds on 'foxy' banks in new ad

Monday, 20 Mar 2017 09:04:30 | Michael Janda

Industry Super is likening the big four banks to foxes circling a hen house. (ABC TV)

The lobby group for industry super funds has launched a stinging attack against the big four banks with a new ad that compares them to foxes raiding a hen house.

In a radical departure from its previous positive advertising campaigns that spruik the superior average investment returns and lower fees of its members, Industry Super Australia (ISA) has opted for an ad attacking the big four banks for their lobbying efforts in Canberra.

However, ISA's chief executive David Whiteley denied that his lobby group was mounting a scare campaign against the banks.

"I wouldn't characterise it as an attack ad, it's certainly a different type of ad," he responded in an interview for RN Breakfast.

"It's very important, however, for us to inform our members, and to alert our members and the general public at large, about the activities that the banks are undertaking in lobbying the Government and other parliamentarians."

Audio: Banks portrayed as foxes in henhouse but Industry Super denies scare campaign (AM)

Mr Whiteley said the banks are seeking greater deregulation of superannuation in some areas, but new rules affecting how industry funds operate.

"The banks have been lobbying the Government change the structure of the governance of industry super funds and, secondly, what the banks have been seeking to do is to get rid of consumer protections for people who do not choose their own super fund," he said.

External Link: ISA's 'banks aren't super' TV ad

The governance change that the Federal Government is proposing would see a legislated minimum of one-third independent directors on super fund boards.

This would force the industry funds to depart from their traditional model of 50-50 representation between employers and unions.

The other key change that concerns industry funds is a move to prevent default superannuation funds being named in awards or enterprise agreements, which would potentially leave the choice of default fund in the hands of the employer.

'Old-fashioned' super system stymying choice

The Financial Services Council, which represents retail super funds, declined the ABC's AM program's request for an interview.

However, in a statement its chief executive Sally Loan said many of the current rules around default funds are outdated and costing consumers money.

"Young Australians in particular want to be able to choose their superannuation fund – they belong to the real world of digital options, competition and choice," she argued.

"Unfortunately, thanks to Australia's old-fashioned super system, which remains protected against competition and choice by industrial laws from a quarter of a century ago, many people are locked into underperforming, subscale union-controlled industry funds.

"The Minister for Financial Services has in fact demonstrated that as many as 800,000 Australians are not entitled to choose their own super fund as a result of trade union enterprise agreements."

Banks may 'bundle' workers' super with business banking deals

However, David Whiteley argued that the banks' main motivation is not to enhance consumer choice but to take control of more employer default funds.

"To force Australian workers to have to choose their own fund, notwithstanding the fact that the vast majority of people currently do not choose their own fund and they rely on employer defaults," he said.

"The concern for us is that what this will lead to is an increase in mis-selling super products and banks seeking to bundle up their super products with an employer's business banking requirements."

When asked if he was worried that the change of approach from positive ads to a negative campaign against the banks might alienate fund members, Mr Whiteley said it had been extensively tested with focus groups.

"People are not surprised with the central proposition that the banks are seeking to get hold of Australian workers' super."

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