The collapse of an industry superannuation fund will result if smaller funds ignore the consolidation process, the national secretary of the Australian Workers Union (AWU) Paul Howes told an industry event yesterday.

"I think it's a miracle that we've never had an industry super fund collapse. I think it's inevitable that one will unless we have some proper consolidation of those smaller players," Howes said at an Association of Superannuation Funds of Australia (ASFA) lunch held in Sydney.

Howes said despite some small industry funds doing "remarkably well" there were still a number of smaller funds that weren't performing, particularly those that were not tied to an industry.

"It is in the interests of working people to see these funds consolidate so we get better economies of scale, and that would drive down costs," he said.

Howes said it would be a mistake to have a forced consolidation of industry funds. However, he expressed concerns that some trustee boards were not acting in the best interests of members.

"I think from time to time some trustee boards make the wrong decision about the future of their funds. Some make the decision about the future of their fund solely based on the interests of those trustee directors, rather than the interests of their membership and their future memberships," he said.

"In some particular funds you have some trustee directors who act like they are shareholders of a private company."

Howes pointed to an unnamed industry fund involved in a recent legal action that could have "ultimately brought the entire industry into disrepute".

"It will only take one small industry fund to collapse and the rest of us will be tarred with the same brush," Howes said.

Howes is also a trustee of industry superannuation fund AustralianSuper.