The establishment of a Superannuation Consumer Centre is gaining momentum, with funding now being sought from industry.
CHOICE has long called for an independent consumer organisation focused on superannuation, having first advocated for the centre in 2009 as part of the Super System Review (The Cooper Review). The notion was discussed further in Paul Costello’s Stronger Super Peak Consultative Group, and the possibility was also raised by Financial Services and Superannuation Minister Bill Shorten in September 2011.
An establishment committee is currently working to raise $10 million from Australia’s superannuation industry to set up a new consumer centre for superannuation. While the federal government has committed $10 million to the centre, this is conditional on securing matching funds from the industry.
Once the funding is secured, the centre will invest it and use the returns to fund its operations. This will ensure that the centre is independent and able to engage in debates with government and industry without fear or favour.
You can read the business case and business plan for the Superannuation Consumer Centre here.
You can also read the Centre's submissions to the government's Financial System Inquiry from both April and August of 2014.
Momentum picking up
The establishment committee is comprised of CHOICE chair Jenni Mack, as well as former Macquarie Bank CEO Allan Moss, former Victorian premier Steve Bracks, former ASIC chairman Tony D’Aloisio, and superannuation industry figures Jo-Anne Bloch, Jeremy Duffield, and Philippa Smith.
The CHOICE-led group is working with both government and leading superannuation companies who are willing to back their clients and give them an independent voice. So far Australian Super, QSuper, First State Super and investment manager Vanguard Investments have made a commitment to help establish the centre.
The centre also has three holding directors: Jenni Mack, Professor Susan Thorp from the University of Technology Sydney and Anne De Salis, former general manager of AMP Corporate Super and head of AMP Direct.
A need for consumer representation
“The industry wouldn’t exist except for the compulsory super system,” says establishment committee spokesperson Jenni Mack. “It collects about $17 billion a year in fees from consumers’ accounts. We are asking for a one-off contribution of one-tenth of one per cent of the industry’s annual fee intake.”
The superannuation industry’s assets currently sit at $1.5 trillion - which is more than Australia’s Gross Domestic Product.
“Super is complex, it’s confusing and it’s compulsory – consumers need and expect there to be a centre that is looking after their interests,” says Ms Mack.
“We want to make sure products are safe for consumers, regulators do their job properly, and the industry works in consumers' interests.”
The centre will fill this role by ensuring the compulsory superannuation system, including both government regulations and industry practices, delivers the best possible outcomes for consumers.
The centre will also perform other important roles, such as:
- Preventing losses by warning consumers about unsafe and dangerous financial products;
- Encouraging regulators to crack down on dodgy operators; and
- Working towards good default products in the retirement phase that remove stress on retirees, and can deliver quality of life independent of prevailing market conditions.