In a new Rice Warner Insights column, Rice Warner chief executive Michael Rice noted that the government's formal response to the Financial System Inquiry (FSI) raised "barely a whisper of objection to a comprehensive list of reform recommendations".
But the government's primary response – Treasurer Scott Morrison's announcement that competition within default super will be referred to the Productivity Commission – has "shades of policy endeavours past".
"Does this seemingly innocuous review signal a fast-track reform to tidy up the industry’s shortcomings?" Mr Rice asked.
At the very least, the review into default arrangements and the efficiency of the super system should provide a "wake-up call" to the industry, he said.
"Although the FSI changed much of the public discourse to focus on fees and retirement innovation, the upcoming Productivity Commission review will now put a time limit on the period within which the industry can act on its perceived shortcomings, or risk having control of its own destiny taken away," Mr Rice said.
"Rice Warner expects many corporate funds and smaller industry funds to wind up, and many larger funds to merge to remain competitive," he said.
The Turnbull government has also stated that more needs to be done to reduce fees and increase after-tax returns to members, Mr Rice said.
"This would be better expressed as improving (long-term) returns after fees and taxes as the two objectives are not always correlated," he said.
"We need a strong system which encourages innovation and flexibility; we must avoid an exclusive focus on fees alone or we will end up with a system unlikely to maximise retirement incomes.
"The government claims it has a strategy for superannuation to improve the operation and efficiency of the system and in doing so boost retirement incomes.
"[In] the next phase in the post-FSI environment [it] will be interesting to see how exactly – and how quickly - this might be achieved," Mr Rice said.
