Illegal super spruiking everywhere
One insider says the unlawful practice of banks offering businesses special inducements to join their superannuation funds is widespread.
A survey this week exposed the practice of offering lower interest rates, reduced bank fees, corporate hospitality and even iPads to convince businesses to switch to a bank-run default super fund.
It is illegal for anyone to receive an inducement to select one super fund over another.
Andrew Proebstl is the chief executive of LegalSuper, which oversees compulsory superannuation for 40 per cent of the legal profession.
He says employers who take inducements should be forced to disclose the special deals.
“[The practice] is fairly predominant, and there are employers who may have commercial business that they conduct with particular financial institutions that offer superannuation funds,” he told reporters.
“They make the decision that by choosing that financial institution's default fund, they may more favourably position themselves to have commercial dealing with that financial institution.”
He said not having any disclosure law creates rampant conflicts of interest.
“Essentially the superannuation savings involved are the savings of the employees, they're not an asset of the employer in any way,” he said.
“The employer would need to be very careful... that they had due process around their selection and decision-making processes.
“If there are circumstances where there is even the smallest potential for some form of conflict of interest, an employer should be obliged to disclose the nature of any commercial arrangement or relationship they have with a super fund they're doing business with.”
APRA and ASIC have launched investigations into the claims made in the survey, which was conducted by Industry Super.
But they may find allegations of unlawful activity difficult to prove.
“I think one of the challenges is that many of the dealings are very translucent so it's very difficult to pin particular instances of where this has happened,” Mr Proebstl said.
“Ultimately, it really can only be addressed by an increase in disclosure requirements around these arrangements so that members can be fully informed.”