New research reveals how consumer protection in superannuation has been watered down
Successive governments have provided dozens of regulatory carve-outs and concessions to products, benefitting banks and other retail super providers over more than a decade, according to a new research report released today by the Australian Institute of Superannuation Trustees (AIST).
The report – based on AIST research and authored by corporate governance expert, Professor Thomas Clarke - shows how regulatory carve outs given to the for-profit super sector have resulted in serious omissions and exemptions in superannuation reforms that have impacted badly on the interests of super fund members.
AIST CEO Eva Scheerlinck said regulatory carve outs or concessions provided to the for-profit super sector had watered down many vitally important consumer reforms in superannuation.
This included government decisions not to improve disclosure and transparency in non-MySuper funds, which manage more than $1 trillion of super across 8 million member accounts. As just one example, a government decision was made not to extend best practice disclosure requirements for MySuper funds to other super products.
According to SuperRatings, in the non-MySuper "Choice" sector, bank and retail-owned funds charge between 117-182% more than profit-to member funds and generally underperform over both the short and long term.
"Constant erosions to the legislation and for-profit super providers being let off the hook has been at an enormous cost to consumers who are effectively left to fend for themselves," Ms Scheerlinck said. "We have a mandated super system but providers managing more than $1 trillion of super savings are not held to account."
The report also notes the legislative gaps in super reforms has led to a systemic lack of comparability of data in the super system. The Australian Prudential Regulation Authority collects and publishes data on the performance, fees and costs of MySuper products, but does not collect or publish equivalent data on Choice products or investment options.
In compiling the report, Prof Thomas Clarke said he had been "astonished" by the sheer number of regulatory carve outs afforded to the banks and other for-profit super providers.
"The research points to an army of lobbyists - and the financial institutions that employ them - having been very successful in persuading governments to go light on regulation," Mr Clarke said. "This panoply of self-interested exemption has arisen over time, incrementally and without any ostensible rationale other than to benefit providers. The exemptions are systemic, on a vast scale, and have been occurring for decades."
Ms Scheerlinck said uniform disclosure requirements across the super system were needed as the first step towards improving regulation in superannuation. This would require extending current
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