AustralianSuper chief executive Ian Silk yesterday fronted the royal commission to answer questions about the advertising campaign known as the ‘fox and the henhouse’, which was created by Industry Super Australia.
Mr Silk told the commission the ad campaign was run as part of a move to prevent changes to super legislation, which AustralianSuper believed would leave some members “worse off” and leave remaining members subjected to diminished scale.
Following further questioning from counsel assisting Michael Hodge, Mr Hayne said the ad was ultimately a form of “political communication”, and questioned whether this was an appropriate use of the fund’s money.
Mr Silk suggested the ad was more akin to “public policy” or “lobbying work”, but the commissioner was not satisfied.
“The question I think … may be that payment for a form of political communication directed to … what are perceived to be the interests of present or future members – here you arrive at a fork in the road – either is not, in the particular case, or can never be … in the best interests of members,” Mr Hayne said.
“That’s one formulation that might be being alluded to, or perhaps the other formulation is not, in this particular case, or cannot ever be, for sole purposes of maintaining retirement benefits for members. Now, I think that may be the underlying proposition that is at play in this area. Now, I raise it now so that everybody later, when we come to submissions, can tell me how wrong I am, where I’m wrong and how I’ve got it completely wrong way up.”
Mr Hayne was at pains to clarify he has reached “no such conclusion” either way, but that this particular issue is a matter for the commission to address in its final recommendations.
What is the point of having a super trustee who does what they are told by the parent entity, the bank in this case? The evidence from the lady from Nulis, very concerning. Are they simply puppets, or have I missed something?
Is that it? That’s the grilling we have been waiting for from the industry funds? what a JOKE this witch hunt has ended up as.
This is a joke this Royal Commission. They will do NOTHING to the UNION buddies of theirs
Just an observation, but it would appear to me that the Industry Funds are being examined by the “C team” and the retail entities the very much sharper A team??
Sole Purpose Test seems to be in two buckets one for the ISA and one for the rest……..pathetic really.
They didn’t bother to ask how signing their new (at the time) insurance arrangement with TAL was in their 2 million members best interests. I’m surprised there was no witness on the stand, presenting their ’emotional’ story because their TPD claim was declined.
Silk argued that the $2M was paid out of the $1.50 per week admin fees that also cover all the running costs of the fund . And Hayne did not ask him one question to clarify how that is possible ??
$2M from part of the $1.50 fee per Member? You really have to admire the thrift of the Industry Funds.
Australian Super is one of (if not the) the largest public offer super fund in the country with $123b under management. With 2.15m members that 1.5pw = $168,061,140 pa (assuming every member pays that same fee). Not exactly rocket science??
Sorry that $168M you calculated was already spent..and lost. The loss on the Superpartners failed IT project by the big Industry Funds was more than $180M. Bet you didn’t know about that even though it was covered in the press. Nice try though. Blind enthusiasm for the ISA is ignorance.
$1.50 per week per member to pay for all the admin costs, wages, rent, advertising etc ? No it is not rocket science to realise that is impossible. The former head of the industry funds,Gary Weaven, is on the public record stating that the $1.50 per week admin fee does not cover all the admin costs. Why do they keep promoting it to imply that it does ? Lies and manipulation.
This was all for show in the farcical royal circus so they can say ‘yes we questioned all avenues in reaching our determination’. It was stagecraft at its finest, with Silk even disgustingly being allowed to joke in his answers, without suffering the same response that others who tried received previously.
It is clear the whole thing is a politicized predetermined witch hunt with our profession in the cross hairs.
To be honest I am equally disgusted at the lack of investigative reporting and seemingly partisan agreement that this publication and their associated publications have as this ludicrous act unfolds. No sensationalist headlines for the ISA ducking and weaving, hey Aleks?
Ah yes, this is the exact embodiment of a witch hunt – Innocent advisers and organisations put to the sword despite having done absolutely nothing wrong! All evidence saying otherwise has been fabricated. It’s a conspiracy.
Dopetta, re-read my original comment, it is about equal treatment, questioning and fixing ALL the industry, not letting ANY shysters get away with lying, subterfuge and ripping members off.
Are you saying ISA members should be? More fool you.
If it’s not so one-sided, then where’s MTAA?
https://cuffelinks.com.au/when-good-defensive-investments-bad/
This problem hasn’t gone away, it’s still there hiding in other industry funds.
I agree with those who came before me that Ian Silk got off lightly at the hearing.
Or what about retail funds such as Host Plus advertising ‘independent financial advice’ while clients are on hold? How are you able to advertise ‘independency’ and not get slammed for it?
Host Plus balanced fund has 90% growth assets to distort performance comparisons with their competitors. Demonstrates how unregulated their behaviour is.Why are we surprised that they market independent advice ? Do they produce an SOA when someone is encouraged to switch their super to them ? The industry funds are behaving like the banks and convincing everyone that they are the solution due to their outperformance. Why are the regulators so blind ?
he got off lightly as the other commentators have said..surely there is more going on in the IFS market?..plus spending a lot of money of policitical stunts…for the long bow reasons that they may lose members if they dont. Aus Super is about 10 times bigger than its closeset fund..
On the flip side though, shows how easy the dock is when you have a cheap well performing fund and further demonstrates how bad CBA, Count, NAB have dropped the ball when for 20 years they could have actually offered good products, with good service, with most of all, reasonably fees..but they all got rich and now the Execs just move on to ruin the next Fin Services company they work at..
Not so sure you’re right about the fees. RG 97 was quashed by the ISA for the reason they thought it would show the cost of property as being more expensive than it really was. Well as far as I am aware, a cost is a cost, and using ChantWest, there are a number of funds, when selecting their MySuper options on their core plans, work out cheaper than ISA funds. The insurance on some is cheaper too. As for the returns, pity retail funds cant use preferred valuers for unlisted assets and value when they want to, or use smoothing to aide their performance. If an ISA fund were to close, I wouldn’t want to be one of the last in the fund!
Why is it that industry super funds are apposed to unit pricing and agreed asset allocations for default performance comparisons ? It is a farce that the commission is not awake to this.
The impression I took from the time in the doc for Ian Silk was that the regulator, lawyers and the commission let Australian Super off extremely lightly. It seems as though they were reinforcing the belief that industry funds are the preferred option. The commission did not delve into the “known” issues and conflicts industry funds have. Very disappointing!!!
I am disappointed the commission has not questioned Industry Fund’s sponsorship of professional sports teams. Is that for the benefit of members? Is that consistent with the sole purpose test?
Actually, I thought Silk got off very lightly. Very disappointed he was allowed to state on several occasions during his time as a witness how good the performance of the ISN has been without really being corrected for that. He even managed to get in a worked example… and still no substantial questions on asset allocation which deliver this supposed terrific performance.
So basically the Industry Funds paid for advertising from members money to restrict competition which would allow employees to make their own choice of which superannuation fund they wish to make contributions to, both employer and employee contributions. The Industry Funds wanted to keep the current arrangements in place whereby an EBA, negotiated by their union and employer, directed those contributions to an Industry Fund. Ian Silk seems to believe that they have a right to restrict employees choice as he believes that Industry Funds are in nearly all cases superior to any other superannuation choice. Does this fly at odds of the ACCC mandate to promote competition? Seems to me that this would be considered unfair business practice whereby an organisation has eliminated competition in order to increase it’s own business interests. Whether an Industry Fund is better or not should be left to the discretion of the consumer to make that choice for themselves, not the conflicted self interested opinion from the beneficiary of such monopolistic arrangements.