The following summaries provide further analysis of the key themes or conduct that was raised in public submissions received by the Commission.
Figure 13: Superannuation submissions: Key themes
The Commission received over 250 submissions focused on unreasonably high fees being charged for financial products or services associated with a superannuation account. Key themes included:
- excessive fees being charged (when compared to the balance of a superannuation account) for:
- contributions into the fund
- roll-over into another fund
- termination or exit of an account;
- management, administration, or advice fees being charged without the knowledge of the consumer, or any ongoing service having been provided; and
- failure to disclose fee structures to fund members, or disclosure of fee structures through complex product disclosure statements.
Inappropriate financial advice
Over 235 of the submissions on superannuation received by the Commission related to conduct by a financial adviser in relation to investment of superannuation. Issues raised in these submissions included:
- failure by financial advisers to explain risk or fees associated with investment of superannuation;
- provision of poor or misleading advice, including advice about investment of superannuation in vertically integrated products;
- failure by financial advisers to follow instructions of the account holder on how to invest superannuation; and
- investing superannuation of consumers with low income or a relatively low superannuation balance in high risk investments.
Default insurance products
More than 220 submissions related to superannuation funds providing life insurance products to members on a default or opt-out basis. These submissions detailed:
- fees for life insurance products substantially or entirely depleting the balance of superannuation accounts, in some cases without the knowledge of the account holder;
- duplication of life insurance products for individuals who hold accounts with multiple superannuation funds, including duplicate income protection insurance; and
- inclusion of life insurance products that the account holder was not eligible to claim under.
Poor administration of superannuation was raised in at least 220 submissions. These submissions detailed:
- delays in processing disbursements, transfer of pensions from other jurisdictions, or release of balances on roll-over into another fund;
- delays by superannuation funds in processing claims against life insurance policies;
- failure by superannuation funds to respond to requests to cancel life insurance products or financial advice options; and
- delays and administrative errors involved in release of superannuation as part of deceased estate dealings.
Governance and culture
Over 150 submissions referred to issues with governance and regulatory frameworks relating to the superannuation sector, or the sales culture within superannuation funds. Issues raised in these submissions included:
- general submissions highlighting a lack of regulation or enforcement of breaches in the superannuation industry by ASIC and APRA;
- lack of transparency about how member funds are used by superannuation trustees, including using funding for corporate entertainment and advertising; and
- submissions from former staff in the financial services industry highlighting sales focus in relation to advice and insurance products within superannuation accounts.
Over 85 submissions were received in relation to the poor financial performance of superannuation accounts. These submissions referred to:
- consumers being encouraged to invest superannuation in products that achieved very low or nil returns across long periods of time, despite assurances of high percentage returns;
- returns for ‘premium’ products being less than the fees paid for management and advice; and
- failure by superannuation funds to explain adequately poor performance or losses on specific products.