The Hayne Royal Commission into Financial Services examined superannuation last week and the revelations strained credibility.
It transpires that superannuation trustees, the people we count on to protect our hard earned savings, can do anything they like with our super without legal repercussion.
We learned that the National Australia Bank was quite happy to take advantage of this protection to charge for services it didn’t deliver.
On Wednesday Commissioner Kenneth Hayne QC released an ASIC file on the transgressions of the NAB.
The report details “various breakdowns in fundamental systems and controls” which allowed the bank to charge fees known as ‘Plan Service Fees and Adviser Service Fees’ in situations where it had no right to do so.
Complaints data from the bank’s own files is also contained in the document which referred to an allegation by the son of a NAB customer who protested about “an ongoing service fee of 1.1 per cent on the client’s account for the past 15 years without ongoing service provided.”
On Monday and Tuesday Suncorp’s fees came under the forensic gaze of the Commissioner.
It transpires that the trustee was faithfully deducting 15% from the super contributions and paying the money to the Australian Tax Office (ATO). This also gave rise to deductions that led to refunds from the ATO.
However, instead of returning this tax refund back to members, each year the trustee has deftly paid it to another Suncorp entity – Suncorp Life and Superannuation Limited (SLSL) – in exchange for what are described as “additional service.”
It seems that Suncorp was already fleecing its members for administrative services, fees for which were collected by the trustee on behalf of another Suncorp entity.
The Commonwealth Bank-owned Colonial First Super apparently broke the law 15,000 times because it failed to move its clients into low fee accounts.
Despite these illegalities the Australian Prudential Regulation Authority declined to take any action.
It appears that the reason why the members were not transferred was that the Commonwealth Bank had neglected to create a no-frills My Super account as they were required to do under the law.
Colonial First State also told customers who rang up asking to be transferred to a My Super account that their fees would rise if they moved their money.
Internal documents from September 2016 showed that Colonial First State call centre operators were instructed to tell customers that, if their super was transferred to My Super accounts, then their fees could rise.
A script for the call centre operator read: “If this transfer proceeds, your ongoing fees and costs may increase.”
It’s becoming more and more apparent that the government’s attempts to ride interference for the retail super funds will erode trust in its economic management even as the trust in the financial institutions is destroyed.
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