MLC and its trustee, NULIS, failed to tell superannuation members they could dial back their “plan service fees” to zero, the royal commission has heard.
The royal commission’s public hearings into the superannuation sector began yesterday, with NAB executive Paul Carter in the witness box.
Counsel assisting Michael Hodge pursued a line of questioning about MLC MasterKey’s plan service fee (PSF), which the company announced it would be “turning off” later this year.
Mr Hodge established that once a member was transferred from MasterKey Business Super (MKBS) to MasterKey Personal Super (MKPS), they could call up their adviser to agree on a different fee.
“The member has the ability to negotiate that fee directly with their linked adviser in the personal plan,” Mr Carter said.
After establishing that the agreed-upon fee could be “zero”, Mr Hodge asked what happened if the adviser didn’t agree.
“The member is in control, and so the member if they deem that they would like the fee to be zero, the fee will be zero,” Mr Carter said.
However, Mr Hodge said there was an “issue” with the product disclosure statements (PDSs) produced by NAB/MLC — namely, that they failed to explain to members the fee could be reduced to zero.
“One of the issues that we identified was that the disclosure to members about their ability to dial that fee all the way to zero should have been clearer,” Mr Carter said.
“It had language along the lines of this fee can be negotiated between the member and the adviser.”
To which Mr Hodge responded: “You’ve used the word ‘negotiated’, but there’s no negotiation, is there? The member can just say, ‘I don’t want to pay this any more.’”
NULIS, the trustee for MLC/NAB, announced on 27 July that it would stop charging PSFs from September 2018.
“Do you know why it can’t stop charging those fees until September of this year?” Mr Hodge asked.
“No, I don’t,” Mr Carter replied.
The royal commission hearings will continue tomorrow. You can follow all of the action on a live blog at InvestorDaily: https://www.investordaily.com.au/superannuation/43410-royal-commission-superannuation-hearings
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