After appearances from IOOF, Nulis, AustralianSuper, Rest, QSuper and Hostplus last week, the second day of hearings into superannuation saw ISA, IFM Investors, ASFA and AMP appearing before the committee.

While similar lines of questioning were followed, the contribution of superannuation to the economy was also explored, as was climate change risks and their relationship with investment.

The Australian Institute of Superannuation Trustees (AIST) noted that the committee also looked to fees, the legislated increase to the superannuation guarantee, remuneration and fund flows.

Most notably, the second day saw AMP having to answer to a number of questions on their response to various issues raised during the royal commission about the practices of the company.

Due to the inability of AMP Australia CEO Alex Wade, director of marketing and customer experience Lara Bourguignon, and general counsel Lucinda McCann to answer a number of key questions, they have been asked to return to the committee at a later date.

Industry Super Australia

Industry Super Australia (ISA) CEO Bernie Dean took to the stand to emphasise the importance of increasing the superannuation guarantee to 12 per cent and addressing unpaid super for Australian workers.

He called the royal commission “a sobering experience” and also expressed the view that ISA is “a big supporter of removing underperforming funds regardless of fund size or what sector they are from and regardless [of] whether they are ISA members or not”.

Mr Dean noted that the ISA has a “commercial sponsorship of $60,000 to reach members and help funds retain members and grow” with ACTU.

The importance of getting super on payday appears to be of utmost importance to Mr Dean, who flagged how “Australians are missing out on $6 billion a year”.

“Getting super paid on payday is a no-brainer. The community gets it. We’ve seen what happens to employers who underpay their staff.”

He went on to say, “It’s a terrible uneven playing field for those employers who are paying super on time and within the law.”

IFM Investors

IFM CEO Brett Himbury began by flagging that IFM has grown to managing $153 billion globally on behalf of 429 institutional asset owners from Australia and 23 other countries.

The committee expressed its concern about unlisted assets, and Mr Himbury seemed to sweep away such concerns – saying that they don’t determine the value of such assets.

The Liberal Party’s Tim Wilson posed the question: “Since you don’t have individual clients, why are you giving $105,000 to the ACTU partnership program?”

In response, the CEO said, “We believe it fundamentally improves returns to our investors. It’s $325,000 over five years – out of a $6.2 million marketing spend.”

He was also queried on the provision of a 7.5 per cent rebate to investors, with Mr Himbury noting “this is not a common industry practice”.

He explained: “At end of financial year 2018, IFM made more profit than what we had budgeted for and had anticipated. If you do prioritise investors, it was logical that investors should get a share of that excess profit in the form of a fee rebate.”

“This amounted to $18 million additional going into member accounts. US investors I spoke to about this couldn’t believe it.”

Mr Himbury also noted “there are opportunities to do more in this country” around infrastructure.

“Infrastructure is first and foremost a tremendous contributor to investor returns, but it also enhances the productive nature of Australia”.

Association of Superannuation Funds of Australia (ASFA)

Dr Martin Fahy said that ASFA’s primary focus is in improving retirement outcomes for members, as well as confidence in the superannuation system.

The CEO began by emphasising that “it’s important to understand that Australia is lucky to have a large number of strong, successful funds”.

“We have a legacy of the genesis of the system where we have a small number of underperforming funds [that are] on the radar of the regulator.”

ASFA has been requested to provide the committee with more information about the “broad principles” of underperformance as flagged by ASFA and the number of funds it would catch.

AMP Super

According to CEO Alex Wade, AMP is at a “low point” but expressed its commitment to make a change and improve its culture.

This includes having a renewed board and new senior team, new training programs and whistleblower policies, as well as a $100 million investment in risk management controls.

Mr Wade also alluded to a consolidation of super funds under the AMP brand, from eight to two.

But when it came to questions, the three AMP representatives present before the committee came up quite short.

Even when Dr Andrew Leigh of the ALP asked the most hard-hitting question for the day: “Are you aware of AMP incorrectly charging a dead person this year?”

In response, Mr Wade said he was confident this was not a systemic issue.

“We are a business that is operated by humans and errors do occur from time to time.”

To conclude for the day, Mr Wilson observed that the CEO had “taken a lot of things on notice”.

“If we are dissatisfied, we won’t hesitate to recall. I’ve been somewhat dissatisfied with respect to some of the answers you have provided.”

The politician said he suspected AMP to be asked to come back for another round of questioning – commenting that “it may be appropriate to have AMP capital and the CEO of the group presenting”.