Industry Super Network (ISN) has spoken out against performance reporting methods that do not disclose all the costs associated with running a superannuation investment portfolio.
ISN made the call after media reports said the Financial Services Council (FSC) has put the development of its new reporting standard on hold until the government announces its response to the Cooper review into superannuation.
ISN is particularly critical of the FSC reporting method, called Standard 6B, because it strips out administration fees and ongoing advice fees or commissions.
"We welcome their decision to suspend these proposals as a first step," ISN chief executive David Whiteley said.
"Given the compulsory nature of super, funds have a higher duty of care to their members," Whiteley said.
"This duty of care includes the transparent reporting of fund returns net of all taxes and expenses. ISN would support the government working with the sector to develop industry-wide protocols for transparent and comparable reporting of investment returns."
According to an ISN report published yesterday, the new FSC standard would add 0.77 per cent to the net investment returns of retail super funds that had a growth asset ratio of between 61-80 per cent over the seven years to June 2010.
In comparison, industry funds would have reported a decrease of their net returns by 6 basis points over the same period.
In the study, ISN compared data of Superratings, which based its returns on the existing reporting standards, including administrative and advice fees, with data from Chant West, which supplied figures according to the Standard 6B of the FSC.
"Standard 6B is definitely against the trend of the whole industry," ISN economist Matthew Steen, who wrote the report, said.
"It goes against what Cooper has recommended and it is against the disclosure requirements that ASIC has set forth.
"We think if the standard was adopted it could be misleading to members because suddenly these significant fees would be stripped out of reporting."
