Retirement
Superannuation’s time to shine… or not
Commission fees were charged to MLC members in the name of “sustainability” despite tenuous links to actual advice provided, the banking royal commission has revealed.
Superannuation’s time to shine… or not
Commission fees were charged to MLC members in the name of “sustainability” despite tenuous links to actual advice provided, the banking royal commission has revealed.
Wording that “could have been enhanced” and a severe bout of memory loss characterised the first day of the royal commission’s public hearings on superannuation as counsel assisting Michael Hodge took to MLC and NAB with a surgeon’s knife.
“Consumers are unable to do anything more than peer dimly through the darkness of their superannuation trustees,” he warned in his opening statement.
“What happens when we leave these trustees alone in the dark with our money? Can they be trusted to do the right thing?”
His questioning of MLC executive Paul Carter didn’t answer the question.
Questioning why commissions for a certain group of customers were grandfathered after transferring them to different funds, Mr Carter said the commissions stayed in place because to remove them would be to break a contract with advisers who would then shift clients to other funds.
“That would impact the sustainability of the fund,” Mr Carter argued.
Mr Hodge didn’t accept the answer, reminding Mr Carter of advisers’ duty to act in the best interests of their clients.
Noting this, Mr Carter said advisers could take clients to products of an equal value proposition but in a separate business without failing the best interests duty.
However, he also conceded that there were “commercial concerns” around the grandfathering of commission fees, namely a loss of revenue.
The commission also interrogated the nature of certain fees charged to customers and in particular a document referring to a commission payment as a fee.
The plan service fees (PSF) in question were described in a document as a fee paid for a service performed by a NAB adviser.
Mr Carter argued that a payment of commission doesn’t imply a lack of services being provided.
“There's an important distinction here,” Mr Hodge retorted.
“If it's a fee for a service and the service isn't provided then MLC has to refund the money.”
He argued the PSF here was a fee for access to service and not a fee for actual services provided.
While Mr Carter didn’t go so far as to agree the wording was misleading, he did concede that the “wording could have been enhanced”.
We are continuing to provide live coverage of this stage of the royal commission as it happens. Check it out here.
RELATED ARTICLES
Superannuation
Australia's super test dilemma reform could boost long-term gains while keeping accountability sharp
APRA’s latest performance test results have reignited a structural debate: can Australia hold funds to account while still backing the nation’s long-horizon investment needs? With the government ...Read more
Superannuation
Super funds rethink strategy as APRA's performance test hits a fork in the road
The latest performance test results have reignited debate over Australia’s superannuation benchmarking regime and prompted a formal government review. Behind the headlines, boards are quietly rewiring ...Read more
Superannuation
Aware Super enhances digital tools for financial advisers, boosting efficiency and client engagement
Aware Super has unveiled a suite of new digital features designed to streamline the workflow for financial advisers and their clients. This significant upgrade includes direct data feeds to Xplan and ...Read more
Superannuation
Super funds flip the script as APRA's performance test sparks strategic overhaul
Australia’s performance test has lifted the floor on retirement outcomes—and divided the industry in the process. After early shockwaves, failure rates have fallen and fees have trended down, but ...Read more
Superannuation
Rewiring Australia’s super performance test: from compliance brake to capital engine
Can an accountability tool double as a nation-building lever? Canberra’s review of the superannuation performance test aims to preserve member protection while freeing funds to back long-dated assets ...Read more
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more
Superannuation
Australia's super test dilemma reform could boost long-term gains while keeping accountability sharp
APRA’s latest performance test results have reignited a structural debate: can Australia hold funds to account while still backing the nation’s long-horizon investment needs? With the government ...Read more
Superannuation
Super funds rethink strategy as APRA's performance test hits a fork in the road
The latest performance test results have reignited debate over Australia’s superannuation benchmarking regime and prompted a formal government review. Behind the headlines, boards are quietly rewiring ...Read more
Superannuation
Aware Super enhances digital tools for financial advisers, boosting efficiency and client engagement
Aware Super has unveiled a suite of new digital features designed to streamline the workflow for financial advisers and their clients. This significant upgrade includes direct data feeds to Xplan and ...Read more
Superannuation
Super funds flip the script as APRA's performance test sparks strategic overhaul
Australia’s performance test has lifted the floor on retirement outcomes—and divided the industry in the process. After early shockwaves, failure rates have fallen and fees have trended down, but ...Read more
Superannuation
Rewiring Australia’s super performance test: from compliance brake to capital engine
Can an accountability tool double as a nation-building lever? Canberra’s review of the superannuation performance test aims to preserve member protection while freeing funds to back long-dated assets ...Read more
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
Superannuation
Aware Super slashes admin fees for retirees by up to 25 per cent
Aware Super has reduced administration fees for members with a retirement income account by up to 25 per cent and lowered the maximum annual fee. Read more
