Consumers are “bewildered” by the thousands of superannuation options says Industry Super Australia, which has accused the banks of “overloading” customers with choices.
Industry Super Australia has released new research indicating that the large range of super options is making it difficult for consumers to decide which is appropriate.
63% of people surveyed said that the range of superannuation produces makes it hard to decide which one is right for people like them.
63% of people also said the banks have a track record of offering a variety of products designed to make it hard to get a clear idea of which is the right one to choose.
The big four banks, combined with Macquarie and AMP, offer around 22,000 superannuation investment options, according to a recent analysis of APRA data by Industry Super Australia (ISA). ISA says that industry funds collectively offer around 660 investment options.
“It seems, the banks and retail funds have a deliberate business strategy to overload consumers with choices”, said ISA chief executive David Whiteley.
“Just as we’re seeing in private health insurance, the proliferation of super product options is muddying the waters,” he said.
“The big banks’ business model is designed to sell products to consumers to make a profit. It would appear this has led to an explosion of product options in super, many of which perform poorly and leave members worse off.”
“These business strategies go to the conduct and the governance of bank-owned and retail super funds, and should be of deep concern to the Government and regulators.”
“Rather than clamping down on these types of bank business strategies, the government appears to be facilitating them.”
Whiteley said it was remarkable that the Government had deferred improved product dashboards for ‘choice’ super products – which are predominately retail super funds – until 2019. ASIC announced earlier in 2017 that it was extending the start date for choice product dashboards, a Stronger Super initiative, by two years – to 1 July 2019.
The survey of 1,000 Australians was conducted by UMR in October 2017 and was commissioned by Industry Super Australia.