Disengaged super members vulnerable to bank deals
Industry Super Australia has criticised the lack of consumer protection around bank super deals as concerns surface that disengaged super members could be targeted by bank-owned super funds.
Industry Super Australia chief executive David Whiteley recently noted that whilst section 68A of the SIS Act prohibits a bank from offering business banking discounts and other incentives in exchange for access to employees' superannuation “there is no civil penalty for this breach to deter this behaviour”.
Mr Whiteley said the assertion is based on legal advice provided by Arnold Bloch Leibler.
In a survey of 550 small and medium-size businesses conducted by UMR Research, Mr Whiteley said 26 per cent of the employers surveyed stated that a major bank had approached them about transferring their employees' default superannuation to the bank’s own retail super fund in the past year.
“Just under half of those approached say their bank offered them benefits to change funds,” he said.
“The most common offers made by the banks involved a direct benefit to the business rather than employees, such as discounts on business banking and insurance products – some employers report being offered tickets to sporting events.”
SMSF Association director of technical and professional standards Graeme Colley said the lack of protection available to consumers around these sorts of deals shows the importance of people exercising their choice of superannuation fund.
“If people don’t like this then they should really vote with their feet and move to the superannuation fund of their choice, not the choice of their employer,” Mr Colley told SMSF Adviser.
“That’s what the government wants people to do, and this might encourage them to act in their own best interests rather than being limited to the choice of their employer.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.