Banks to secure management of employees' superannuation funds
Updated
Australia's major banks are sharpening up incentives to business to win a greater slice of lucrative default superannuation schemes, according to research out today.
Industry Super Australia (ISA) says the big four banks are enticing businesses with "bundled incentives" to secure management of their employee's default funds with offers of free financial advice, corporate hospitality and discounts on insurance, banking and business loans.
A study by the research group UMR shows a sharp rise in businesses switching default funds after being lured by bundled incentives from banks — up from 33 per cent in 2014 to 60 per cent in late 2016.
ISA chief executive David Whiteley accused banks of using a loophole in the Fair Work Commission's consumer protections which broadly prohibit the offering of incentives for businesses to switch employee funds.
"The hard sell behind this practice is quite incompatible with the underlying objectives of compulsory superannuation," Mr Whiteley told the ABC.
"This research lifts the lid on the deals being done behind closed doors to win default superannuation business."
Mr Whiteley urged stronger laws and protections for workers, many of whom have little knowledge of how their retirement nest egg is being managed by employers.
"The big banks are relentlessly lobbying for default superannuation protections to be completely abandoned and the system opened up," Mr Whiteley said.
As part of the commissioned research, UMR spoke to 560 businesses, of which 60 per cent changed their default superannuation fund after being offered incentives.
The research found that 7 per cent refused to changed their default super fund while 33 per cent offered benefits were still considering their position.
The ISA's accusations of a "strategic deployment" of incentives come as major banks continue to feel consumer, regulatory and government scrutiny for bad and unethical behaviour.
The Australian Bankers Association, which represents the major banks, is fighting a backlash against questionable tactics and recently updated its code of conduct.
The chief executives of the Big Four — ANZ, Commonwealth, NAB and Westpac — are scheduled to face their second grilling before the House of Representatives Economics Committee next month.
Topics: business-economics-and-finance, industry, banking, superannuation, australia
First posted
