Commissioner Kenneth Hayne has questioned whether millions of dollars of member money spent by super funds on “political communication” meets the sole purpose test.
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.
AMP and TAA have sought an increase in the cap on life insurance commissions for financial advisers.
The government has announced a post-implementation review of the removal of the stamping fee exemption.
Oliver Wyman and Morgan Stanley have outlined what to expect under ‘Wealth Management 3.0’.
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