Super review expected to spark industry showdown By business editor Peter Ryan
Posted 13 minutes ago
The clock is ticking down to the release of the Federal Government's long-awaited review into the superannuation system.
The inquiry, headed by former ASIC deputy chairman Jeremy Cooper, is expected to recommend tighter regulations on retirement nest eggs, in particular the controversial fees and commissions paid to financial advisers.
Such a recommendation would put the Government on a collision course with banks and insurance companies which control the retail super funds industry.
For the past three years, the not-for-profit Industry Super Network has had a single mission - to prove that retail superannuation funds have been gouging retirement nest eggs with fees and commissions.
The network's latest commissioned report claims financial advisers reaped $1.5 billion in 2009 alone.
Chief executive David Whiteley expects the now imminent Cooper Review to come down hard on retail funds that he has accused of draining the compulsory superannuation contributions.
"It has certainly been a very robust debate but I think we are now at a point where all the evidence is in," he said.
Industry bracing for stoush
The Cooper Review is expected to push for a low-fee super model dubbed MySuper, where members would be able to "opt-in" for specialist financial advice.
Mr Whiteley says that is good public policy but he does not think retail funds and their powerful backers will accept the recommendations quietly.
"We think they are likely to be opposed by the major banks, the major insurance companies which own the retail funds and we suspect they are likely to be opposed by the financial planning community too," he said.
"I think that, in part, is why we have seen so much media coverage in the past week or so about these MySuper proposals.
"Quite clearly the banks have got very considerable influence with the media, with the community and influence, of course, with the Government."
Retail funds have waged a ferocious campaign to repel the industry super attacks and have pushed members to adopt a new charter based on "fee for service" rather than commissions.
As part of the fight back, former New South Wales opposition leader John Brogden was recruited in July last year to head their chief lobby group, the Investment and Financial Services Association.
But Mr Brogden declined AM's request for an interview. A spokesman says he wants to see the full Cooper Review rather than fuel speculation.
Fees and commissions
So with the two key players at loggerheads, can the Cooper Review go beyond the hot issues of fees and commissions?
Pauline Vamos heads the Association of Superannuation Funds of Australia, representing retail, industry, public and private sector funds.
She says the current debate on commissions ignores Australians who want to pay for investment advice.
"A fee for service is a very small aspect of the overall Cooper Review," she said.
"We haven't seen the other pieces of the jigsaw, which is those members who want to make guided investment choice and those members who want to make full investment choice.
"But whatever the level of investment choice, any sector can participate.
"What we need to make sure is that the structure around those different levels of investment choice are fair, are equitable and can be provided efficiently."
The Cooper Review has until the end of June to release its findings, but some industry players expect it to be delivered to the Government well ahead of schedule.
