“For now, we don’t intend to disclose which funds make this outlier list, recognising that being effectively labelled among the ‘worst-in-show’ is likely to hurt the financial interests of members,” she said.
“But I do stress ‘for now’. We are actively developing ways to provide greater transparency around the outcomes individual funds and products are delivering their members, thereby making performance clearer to all.”
Call for greater enforcement
Ms Rowell said it was a “pity” federal Parliament had not yet passed laws to give APRA expanded powers.
“It is a pity that the Members Outcome Bill – which provides an expanded directions power and the ability to take civil penalty action for breaches of obligations to members – has not yet passed the Parliament, as our ability to compel action is more limited than we would like,” she said.
“But we will be using whatever tools and powers we have to get action.”
An Australian Securities and Investments Commission commissioner, Sean Hughes, flagged greater enforcement in the area of self-managed super and property one-stop shops.
“The risk is that a number of funds are over-exposed and over-leveraged to residential property,” he said.
One-stop shops are in the business of convincing people to set up an SMSF to invest in property, collecting big fees on the way.
In a keynote speech earlier, AustralianSuper raised concerns about consumer protection in the SMSF segment, calling for an inquiry.
Australian Institute of Superannuation Trustees chief executive Eva Scheerlinck said all of the evidence showed SMSFs offered poor value and outcomes for members with balances below $500,000.
“We have long been concerned that they oversold and overpriced for people with low balances – this should concern all taxpayers as it puts extra pressure on the age pension if these funds fail,” she said.
The Australian Council of Trade Unions backed the call, saying industry super funds consistently out-perform bank-owned funds.
‘Serious concerns’
“The Productivity Report raises serious concerns about the performance of these funds and the security of the retirement of their members,” ACTU Assistant Secretary Scott Connolly said.
“The banks sell SMSFs to low super balance workers because they can charge massive fees, take a large cut of investment returns with little to no scrutiny.”
SMSF Association chief executive John Maroney said an inquiry was unwarranted.
“It has been clearly demonstrated that the PC’s analysis, showing SMSFs with less than $500,000 are underperforming the APRA-regulated funds, used highly questionable data about SMSF investment returns and costs, as well as poor methodology, to reach this conclusion,” he said.
Superannuation lawyer Michael Hallinan agreed the SMSF segment was healthy.
“Two very significant reviews relating to superannuation have occurred in last 10 years – the Cooper review and now the Hayne review, and in both reviews SMSFs as a savings structure have not been the subject of adverse comments,” he said.
“It seems SMSFs have the right governance arrangements.”
The Hayne royal commission did, however, examine cases where people were advised by financial planners to set up SMSFs when it was not in their interests to do so.
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