70% of people think all super funds should be not-for-profit, poll finds

A large majority of Australians, 70%, believe all superannuation funds should be not-for-profit, according to a new poll that finds a poor level of trust in the 'big four' banks.

The Essential Poll, commissioned by Industry Super Australia, finds that only 31% of Australians trust the views of the big four banks – NAB, Commonwealth, Westpac and ANZ – on super compared with 69% who trust industry super funds.

The results come before a hearing on Friday to examine National Australia Bank witnesses; the second round of a new parliamentary committee process that has grilled the big four about financial planning and insurance scandals, credit card and mortgage interest rates, and donations to political parties.

The poll of 1,000 Australians, released on Friday, found 61% of respondents thought the Fair Work Commission was trustworthy when it came to "ensuring that the superannuation system works in the best interests of ordinary Australians".

Asked about big banks, 61% said they were not trustworthy compared with 31% who said they were. The government also fared poorly, with 53% saying it could not be trusted and 38% saying they could.

Industry Super Australia is keen to defend against Financial Services Council moves to dismantle the system of the Fair Work Commission setting default superannuation funds in awards based on quality measures, including returns.

In a speech on Wednesday, the FSC chief executive, Sally Loane, said it was a priority to "open up the default system to competition" because consumer choice would lead to innovation and greater engagement with the super system.

ISA is concerned that, under a system without the commission steering award-reliant workers to industry funds, banks could use business banking relationships to pressure employers to nominate for-profit funds as defaults.

The poll found 75% of people thought banks should only be allowed to offer super products "if it leaves their customers better off".

A majority of respondents (58%) said banks would "use the fact that super is compulsory to exploit fund members" and the same number said "more involvement by the banks in superannuation could mean people like me have less to retire on".

The Productivity Commission is currently reviewing the process of super fund selection. The government response to that review and its push to require more independent directors on super boards could alter the balance between industry and bank-run funds in a system with $2.1tn under management.

The Industry Super Australia chief executive, David Whiteley, said the poll results showed the public wants superannuation to work solely in their interests and not as a profit-making opportunity for the banks. "When it comes to super, the banks are legally required to act in the best interest of their customers but most Australians don't believe they do," he said.

"The banks' relentless lobbying to remove consumer default protections could result in people ending up in under-performing funds and a nest egg that's tens, even hundreds, of thousands of dollars short."

Whiteley said the parliamentary committee members should ask bank chief executives about the performance of bank-run super funds, which he said had lagged industry funds for two decades.

FSC argues that there is a wide variation in the performances of super funds and increased competition would "lower fees and increase net returns to consumers".

But Whiteley counters it will lead to "cross-selling of advice, insurance and super designed to boost shareholder profits rather than leave them better off". "If scandals we see elsewhere in banks' vertically integrated business model are repeated in superannuation management, it could undermine public confidence in the system."

Greens MP and committee member, Adam Bandt, told Guardian Australia he would ask bank executives about housing affordability and risks posed by climate change to their businesses models.

https://www.theguardian.com/australia-news/video/2017/mar/20/industry-superannuation-funds-launch-fox-in-henhouse-attack-ad-video