The fifth round of hearings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry kicked off in Melbourne this morning, with Michael Hodge QC laying the parameters of its focus on the conduct of superannuation trustees.
Among a number of thorny subjects, Mr Hodge revealed that the commission will be assessing possible conflicts of interest and breaches of the ‘sole purpose test’ relating to trustees’ financial support of lobbying group Industry Super Australia and its marketing activity.
Specifically, the royal commission will examine the case of 2017’s controversial ‘Compare the Pair’ ad, which inferred that banks operating in the superannuation sector was akin to a “fox in the hen house”.
ISA’s ‘compare the pair’ campaign has often also criticised the independent financial advice sector in the past.
The commission will also examine the case of The New Daily, a digital news website owned by Industry Super Holdings.
A live blog of proceedings hosted by ifa sister titles Nest Egg and InvestorDaily noted that a recent article on the superannuation hearings published by The New Daily did not mention any industry funds until the fifth paragraph.
Mr Hodge also noted the commission will place its attention on financial advice provided by super funds, which follows ASIC’s announcement last month that it will commence a probe into intra-fund financial advice.
For more on the parameters of the superannuation hearings, and live coverage of proceedings, please visit: https://www.investordaily.com.au/superannuation/43410-royal-commission-superannuation-hearings
“Compare the Pair” We only compare our own lemons.
australian super is the best fund, all risk profiles out performing the benchmark and peers in 1, 3, 5, 7 and 10 years. stick to the biggest and the best, give those rip off wrap funds the boot. cant believe it has taken this long for BT and the like to finally make the fees sensible on these platforms. IOOF still ripping people off.
Oh you mean their ‘balanced’ fund currently invested only about 15% in defensive assets is outperforming a benchmark of funds invested almost 50% in balanced assets? Funny that.
If I have a client come back as ‘balanced’ in their risk profile, I cant recommend balanced industry fund investment options as they are all actually high growth…
This is one of the most ill informed comments I’ve seen on this page and that’s saying something.
There is no person by that name on the ASIC Planner register, so I don’t take the comment to be anything other than someone trying to push their own barrow. Either a member of the fund, a staff member, or just a stirrer. Either way, the comment is of no importance…
Well lets see how they fair when the RC lays into them next week. Some of those skeletons might come running out of the cupboard…
A particular super fund was involved in the building and ownership of 1 Bligh St Sydney.
A contractor I know of who was involved in the project at the time, indicated to me that some of the service providers used preferred inferior products at over-inflated prices. This person knows very little about super in general. But they do know their trade. They were simply expressing their frustration at what they were seeing.
Here is an asset manager with Billions of members super funds, used to construct this massive building, using ‘preferred’ service providers with over-inflated prices, a finished building valued off-market via preferred valuers, which is then allocated to the defensive part of members portfolios. Thankfully this super fund is not in retirement (outflow) phase, so the (mandated) inflows from accumulation members can absorb the difference between reality and fantasy.
And noone can see the problem with this. Seriously.
The RC must shed light on this.
Yes CBUS was the big investor in No 1 Bligh St . The only tenant for a very long time was Clayton Utz and the major part of the building was vacant. However, no doubt CBUS valued their investment at COST PLUS A MARGIN FOR FUTURE IMPROVED VALUE (I have not heard of this before but sounds quite justifiable) and also no doubt CBUS claimed very good returns for their Members. What a scam!!! But not the only one practiced by ISFunds. Clayton Utz was the first tenant and who knows why chose to be first. A through and exhaustive examination of the investments by IS Funds is needed to weed out the suspect investments.
How do we actually get this to the RC attention????
Yes, talk about conflict of interest!
I just read an article in the AFR which suggested C-Bus will no longer be required to attend the RC hearings to answer questions over their $7M donation to the unions. If this is true, the integrity of the RC has just been shredded.
Guys have you not heard of a mandated account ….that is how industry super funds make their money pay big spnosorships and big salaries to their execs I hope the RC investigates the mandated account.
“Compare the pair” ad campaign was just deceit and lies. How did they ever get away with that….oh of course, it was the union industry funds.
If we used any return figures like that we would be slaughtered.
Like right now they are getting away with hidden fees and money being diverted to unions and union fat cats.
I just wonder if the R.C. will get to the bottom of all the theft and deceit.
I wonder if the R C will ask why they can spend thousands for friends to travel OS for “””PD””””. And not blink an eye. Why are they exempt and we are obliged to declare all between $ 100 and 300 and more is illegal. Super is super is it super ain’t super. One rule for all or is it positive discrimation in favour of industry funds. Bet not many knew this was going on. Mr Editor please pass this info to the R C.
Yep, sporting club sponsorship, advertising and trade union gravy train….surely all of these are in the best interest of their members and perfectly justifiable within the definition of the Sole Purpose Test ??
If the investigation finds that none of these activities breach the Sole Purpose Test, then the clarity about the biased agenda will be so very clear that it will leave absolutely no doubt there are 2 sets of rules, but one piece of legislation.
[quote=Steven]I spent the last four years reviewing many superfunds. On average three a day and most were smallish industry superfunds. The returns were pretty average and the cost was NOT the saviour they make themselves out to be. Yes there isn’t commissions but they are still way too expensive for what they are. The whole super industry is full of snake oil salesmen and the industry funds are no exception.
[/quote]
” THE WHOLE SUPER INDUSTRY IS FULL OF SNAKE OIL SALESMEN ” !!!!
THE WHOLE INDUSTRY !!! Wow Steven, you seem so well informed…..sexist too.!
I am sure all those professional female financial planners who deliver great advice in relation to superannuation would be really please to be called salesMEN.
And franking credits do not belong to the investors whose money is invested in shares but these credits are deposited into the General Admin Accounts and used to subsidise all overheads.
At the football on the weekend and all we can see is industry fund advertising. Who is paying for that, the members.
Walk into an industry fund office and you are hardly going to get anything else????
I spent the last four years reviewing many superfunds. On average three a day and most were smallish industry superfunds. The returns were pretty average and the cost was NOT the saviour they make themselves out to be. Yes there isn’t commissions but they are still way too expensive for what they are. The whole super industry is full of snake oil salesmen and the industry funds are no exception.
Direct property has artificially inflated their returns and hooked investors in. What happens when this under-performs,and it will !
Nay mate……the Industry Funds call direct property a defensive asset, same as infrastructure also a defensive asset. Anyone remember MTAA, best performing “balanced fund” for 10 years straight pre GFC. Only problem was it was over 95% in growth assets and about half those growth assets were in highly illiquid infrastructure that sank big time in the GFC.
But hey “Little Things make Big Things Grow” is a catchy jingle so who cares really what the investment risk is and being falsely sold via the unions.
It was ok because after a mass withdrawal from MTAA after crappy performance , they put MR John Brumby in to give him a job !!! , remember the old premier .
Notice comrade Hedware is strangely quiet. I imagine he will come out crowing like a cuckoo bird if as I suspect the royal circus doesn’t pry hard and lets the ISA slide off easy. Would prove the inherent bias of the RC that has so far been displayed, in conjunction with ASIC’s utter bias. I note ASIC also got an easy pass earlier this year when they weren’t questioned harder over their negligence and why there have been nil investigations into such a large portion of super in OZ. I sincerely hope I am proven wrong on all counts.
They also need to look at industry super funds showing simplistic cost comparisons to justify customers rolling their super funds into industry super funds without a Statement of Advice. This practise is rampant. They are acting like the banks. It is all about building their FUM.
Nothing will come of this. Never has and never wil because it plays into ASIC’s hand ie anything to get rid of financial planners which they have a pathological hatred for will be OK. Anyway after 20 years and being sucked dry of any passion I ever had for this industry I’m out in a few months so dont care.
Only the blind wont be able to find corruption here !!!!!!!
Its good they are looking at the advertising but the most important part of all of this needs to be assessing the asset allocation. You should only be able to have a ‘default’ fund as balanced and that ‘balanced’ fund cant be 90% growth assets.
When the next correction comes, and it will, the general public will be crying they were mislead (which they have been).
Property and infrastructure are not defensive asset classes.
As before they just wont revalue their unlisted assets, apply smoothing that they have always done and then hoodwink the public AGAIN by saying they have the best performance in the bad times…
MTAA anyone ? Awesome pre GFC
Disaster in and after GFC.
Over 90% Growth assets in a Balanced Fund. WTF
And not very liquid as well (way too many direct assets), hence they had to close it off and start a new default. From memory they kept the same Canberra based asset consultant (then again MTAA head office is in Canberra).
Well that’s a start, funny that they say some of them have nothing to answer for with regard to fees…
And about time too! Finally, I’m seeing something good coming out of the Royal Commission.
These ads are so deceptive and misleading and should have been ‘cleaned up’ to reflect the true picture of how industry superfunds operate years ago.
It’s about time these hypocritical industry funds get put in the spotlight!
If it’s proven that the advertising is in breach of the sole purpose test, I guess there will be a lot of sporting teams out looking for new sponsors. Oh well, I guess the rising numbers of online betting agencies will be able to slot straight in, at least they are out there improving peoples financial position, unlike financial advisers…