The Financial Services Council has called for strengthened governance and increased competition in the superannuation system, which Industry Super Australia says is a call for more cross-selling and bundling of super products by the major banks.
FSC CEO Sally Loane used the release of the FSC/UBS State of the Industry 2017 report to call for ‘Super 2.0’.
“Our 25 year old super system has done pretty well up till now. But in order to ensure this superb piece of public policy is fit for the next generation – where consumers and choice rule and Millennials choose to work in the gig economy – we need to design Super 2.0.”
Loane said the FSC has “strengthening governance for all trustees” and “opening up the default system to competition” as its top priorities for the superannuation system.
“Competition in markets has consistently resulted in cheaper prices for consumers, better levels of product and service quality and new and innovative products and services.”
“Competitive markets are more innovative. There are lower barriers to entry. Competition spurs investment in products and innovation that benefit consumers.”
“If we are to ensure that super will go the distance for the next generation we cannot persist with the outdated 25 year old system that is hide-bound by protectionist industrial laws from a different era.”
“We urge the Government to prioritise these FSI recommendations to open up super to competition and choice.”
Industry Super Australia (ISA) said the speech foreshadowed a “grim vision” of the future of the superannuation system.
ISA said the changes favoured by the FSC would entrench cross-selling of superannuation products by banks and the bundling of business banking and employee default super funds.
“Let’s be clear, ‘choice’ means cross-selling; and ‘competition’ means bundling up business banking with workers’ super,” said ISA chief executive David Whiteley.
“The scandal-prone banks want to get their hands on Australians’ super. This is against the tide of public opinion,” he said.