The decision was handed down at the conclusion of a public hearing in the Federal Court in Sydney today into the FWC’s four-yearly review of default funds.
The public hearing was instigated by the Financial Services Council, which argued the ‘expert panel’ was constitutionally invalid.
The hearing, to which Industry Super Australia (ISA) is the first responder, stems from FWC president Iain Ross’s decision to appoint himself to the panel following the resignation of MTAA director Vicki Allen due to a potential conflict of interest.
But Mr Ross defused the situation somewhat on 28 May when he wrote to the minister for employment Eric Abetz, asking the minister to quickly fill the vacancy “in order to resolve any residual uncertainty regarding the constitution of the panel hearing matter AM2014/6”.
Update: Financial Services Council chief executive John Brogden said: “The Federal Court found the FWC Expert Panel lacked the number of superannuation experts required by law.”
FWC President, Iain Ross was also found to have acted outside his legislative powers by appointing himself to the expert panel, added Mr Brogden.
“We have argued from the beginning that the Expert Panel was conflicted and then incorrectly reconstituted,” he said.
“The Federal Court has today upheld our position.”
“We want an open, competitive process which allows every APRA-approved MySuper product to compete for default superannuation contributions,” said Mr Brogden.
“A genuinely competitive market will lead to more transparency, lower fees and better services for employers and employees,” he said.
However, Industry Super Australia released a statement saying the FSC had “failed to remove the quality filter on default superannuation”.
“In a decision handed down this afternoon, the Federal Court has found that the FWC process for default fund selection – which ensures default funds are chosen on merit – will stand,” said the statement.
ISA deputy chief executive Robbie Campo said the courts’ ruling was a victory for common sense.
“The vast majority of employees and employers rely on the super default funds selected through the FWC,” she said.
“The bank owned super funds oppose the process recommended by the Productivity Commission to ensure that default funds served the best interests of its members,” said Ms Campo.
