In its post-FSI submission to Treasury – released yesterday – the financial product manufacturers’ lobby group pledged support for a number of the Financial System Inquiry’s recommendations, including changes to enhance the competitiveness of the superannuation market.
However, while it broadly supported changes to the process for default funds – arguing that the government should “allow all Australians to select a superannuation fund” – it called into question the data underlying its conclusions on investment fees.
“The FSC disputes the premise of various submissions and pieces of research that claim to demonstrate that fees in the Australian system are unjustifiably high,” the submission said.
“The data on which these reports were based is inappropriate and misleading, resulting in false conclusions. This point was accepted by the FSI in the final report, however it was again concluded that Australia had high fees on a global scale. This is not the case.”
Specifically the submission takes issue with the Grattan Institute’s analogy of the Chilean pension system, claiming the basis upon which administration fees are compared is not accurate.
In addition, the FSI’s reliance on OECD data is also misleading, the submission contends, as the data does not reflect the nuances of the Australian superannuation system, such as the full-service membership model.
The submission also rejected the FSI proposal of a product design and distribution obligation, arguing this new conduct requirement is “unnecessary” and would conflict with the “existing and multi-layered obligations” already facing providers.
Equally, it rejected the FSI recommendation to arm ASIC with product intervention powers, which it says could see the regulator “stray into the field of mandating permissible products”.
The FSC also attached its submission to the Trowbridge report, leaked to InvestorDaily earlier this month.
