The Investment and Financial Services Association's (IFSA) opposition to proposed changes to the default fund system is about protecting the financial services industry, according to The Australia Institute research fellow Josh Fear said.

"Rather than looking after the interests of super fund members, IFSA's position appears to be that the for-profit sector should be protected at all costs in the interests of competition," he said.

Fear said competition in the super sector is deficient because the vast majority of the workforce is highly disengaged from their superannuation and decline to make a choice about their fund.

"At the moment some funds feel compelled to give their members more than 100 investment options, all in the name of choice. But this is a meaningless choice for some people," he said. 

A report released earlier this week by the Australia Institute and Industry Super Network (ISN) proposed a set of criteria for default funds for people who did not exercise choice of fund.

These included capping fees and prohibiting the payment of ongoing financial advice fees, including commissions.

IFSA chief executive Richard Gilbert said the implementation of such policies would mean a contraction of the super industry and a reduction in the number of funds.

"We want to make sure consumers can select from institutional or retail funds because that is what consumer preference is all about," Gilbert said.

However, Fear said retail funds could easily meet the new default standards that were proposed in the report.

"If retail funds want to look after members, they could easily meet these basic standards," he said.

"The for-profit sector can actually benefit from a default safeguard, but only if they provide a service that is in the interests of ordinary fund members rather than just wealthy customers."