In an FSC member webinar on Thursday, the industry body’s deputy chief Blake Briggs questioned Jane Hume on the revised reforms, which now included administration fees as part of the government’s new underperformance test that could see laggard funds wiped out of the system.
The FSC has previously urged the government to “carefully consider” its approach to including administration fees in the test, with Mr Briggs pointing out that funds with large numbers of duplicate accounts raking in increased fees were “being rewarded for making themselves look cheaper”.
Ms Hume said the decision to clarify the government’s approach to the proposed legislation, which is currently before the House of Representatives, had been a reaction to industry feedback.
“The decision to include administration fees came following widespread consultation,” she said.
“The regulations released for consultation further strengthen the performance test.
“Treasury analysis of APRA data estimated there could be around 21 products that were considered underperforming by more than 50 basis points over eight years – more recently we’ve recut those figures to include admin fees and they now estimate it could be 25 products, so it doesn’t make a huge difference.”
Ms Hume said the reforms were “not about industry versus retail funds”, despite the ongoing public stoush between the two sides of the super sector around the reforms – which were roundly criticised by major industry funds prior to including administration fees in the test.
“It’s about underperformance, and it ensures the test is about outcomes delivered to member balances,” she said.
“If we didn’t include admin fees, it would let off the hook those products that have charged very high fees for the past eight years.”
She added that the reforms gave a “strong incentive” for funds to look at how their total fees stacked up against the competition, as well as creating better alignment between the super industry and members when it came to fund comparisons.
“The Your Super comparison tool on the ATO website is inclusive of admin fees, so it makes the underperformance test and the consumer facing online comparison tool look more reflective,” Ms Hume said.
