Westpac chief executive Brian Hartzer was grilled at a parliamentary inquiry around its BT super fund being one of the worst performing and enticing customers to stick with the fund through ‘bundled services’.
Appearing at the House of Representatives standing committee on Friday, Mr Hartzer was questioned about the major bank’s superannuation offering through BT Financial.
Labor MP Matt Thistlethwaite asked the Westpac CEO about reports that employers could be prosecuted for the underperforming retail super funds that manage staff retirement savings.
Mr Thistlethwaite referred specifically to a 21 January news article in The Australian that noted Westpac’s BT super fund was one of the worst performing super funds in the last seven years.
“The article points to ‘bundled services’ for the business behaving employees in your BT retail fund. What are those bundled services?” the MP asked.
Mr Hartzer said he was not familiar with the news article.
“I’m assuming that bundled services means you provide concessions to the employer on other banking products for bringing them into BT’s fund?” Mr Thistlethwaite said.
Mr Hartzer replied: “We checked quite closely and that is not our practice. The corporate super that is offered up is meant to be on a competitive basis for the services provided. We don’t provide inducements in terms of banking.”
Concerns over the relationship between retail super funds and employers were raised by the Productivity Commission in its report into the superannuation sector. Released in January, the report recommended the creation of a ‘best in show’ list of funds for employees to choose from.
In December last year, The Australian reported that ASIC commissioner Danielle Press said the regulator would crack down on employers who placed employees in poor-performing funds in exchange for “bundled services” that were provided to them by the banks and finance companies that owned the funds.
“We’ve got to look at the role of employers in the default system and how they are making their decisions on what funds are their default funds,” Ms Press told The Australian.
“At the end of the day, consumers are disengaged. There’s no obligation on employers to make that default choice in the best interest of their employees.”
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