The superannuation industry has, broadly, welcomed the Royal Commission into the banks, while being displeased that it will extend to superannuation.
The joint statement from the PM and the Treasurer said that the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry would consider the conduct of superannuation funds, excluding SMSFs.
One of the areas into which the Royal Commission will be required to inquiry, according to the draft Terms of Reference, is:
the use by a financial services entity of superannuation members’ retirement savings for any purpose that does not meet community standards and expectations or is otherwise not in the best interest of members.
The Australian Institute of Superannuation Trustees (AIST) welcomed the Royal Commission in regards to the banks, but said broadening it to include superannuation was “unnecessary” and a waste of taxpayer money.
“It is disappointing that the Government is seeking to deflect from the real and systemic problems plaguing the big four banks, by including the superannuation system in this inquiry,” said AIST CEO Eva Scheerlinck.
“Australia’s super system is world class, and there is no evidence of gouging, fraud or unethical behaviour to warrant a Royal Commission into the industry,” she said, noting that the super system has been the subject of numerous inquiries, some of which are ongoing.
Scheerlinck warned that the Royal Commissioner will be “hard pressed” to meet the 12 month deadline set by the Government.
The Association of Superannuation Funds of Australia (ASFA) also said it was disappointing that the Government had included superannuation in the scope of the Commission.
“A plethora of never ending inquiries, reviews and regulation is at odds with maintaining a system that is serving Australians tremendously well,” said ASFA.
Minister for Revenue and Financial Services Kelly O’Dwyer rejected excluding superannuation from the Royal Commission.
“Despite the views of some in the superannuation industry, there is no compelling case to carve out such a significant part of our financial system from this inquiry – especially given that the superannuation system operates under a compulsory model,” Minister O’Dwyer told the ASFA Annual Conference in Sydney.
“The entire financial services industry must be able to stand up to scrutiny.”
“The proposed terms of reference require the Royal Commission to consider the use by a financial services entity of superannuation members’ retirement savings for any purpose that does not meet community standards and expectations, or is otherwise not in the best interests of members.”
The SMSF Association is supportive of the Royal Commission and pleased that SMSFs are excluded.
SMSF Association CEO John Maroney said that the Commission will provide an opportunity to increase transparency and improve ethics in the financial services sector.
“Ensuring that consumers always receive high-quality advice and services in an ethical and efficient manner from these sectors is essential to Australia’s national prosperity, as well as the retirement savings of all Australians,” he said.
Meanwhile the ACTU is concerned that Government is attempting to shift focus to the superannuation industry to protect the banks.
“Allowing the big banks to set their own terms of reference, and trying to smear industry super, risks making this important process a farce,” said the ACTU.
“Industry Super has returned workers more than banking super, and has not ripped off working people.”
The ACTU has been campaigning against a number of pieces of superannuation legislation, many of which are scheduled for debate in the Senate on Monday the 4th.