Industry Super Australia has called for a ‘better off’ test to apply to banks selling superannuation products.
“The cross-selling or up-selling of super should be subject to a ‘better off’ test. That is, the bank must ensure that the customer is better off than in their current super arrangements,” said ISA.
Pointing to the profits recently reported by some of the banks, ISA said that “serious questions” need to be asked about whether consumer protections are strong enough to balance the interests of shareholders and consumers.
“When a consumer walks into a bank, they should be confident that their needs and circumstances are being taken into account and they should leave better off.”
“Regrettably there is more than enough evidence to suggest that that this isn’t always the case – with scandals and institutionalised mis-selling stretching back years.”
“Further, there are concerns about the cross-selling of super to bank customers and the bundling of superannuation with discounted mortgages or bank accounts.”
In 2015 ISA released research which indicated banks may be offering benefits to employers to encourage the switching of default super funds for employees.
“It is instructive that there is no clarity as to how compulsory super services operate within the vertically integrated banks. There are concerns about conflicts of interests, related party transactions and the impact on fund member’s retirement savings, evidenced by the significant long-term underperformance in bank-owned super funds.”
“There is an obligation for a higher duty of care for superannuation because it is compulsory. Banks must meet this higher duty of care,” said Industry Super Australia.