Industry Fund Services has said it will refer to the Australian Securities and Investments Commission (ASIC), analysis by Chant West Financial Services questioning the validity of “net benefit to members”.
Chant West principal, Warren Chant, this week followed up an address to the recent Investment and Financial Services Association national conference in Brisbane, by releasing a statement suggesting the “net benefit to members” analysis contained in the choice of superannuation fund television commercials might be misleading.
The chair of Industry Fund Services, Garry Weaven, immediately responded questioning the Chant West analysis and claiming it “appears to be deliberately misleading and accordingly will be referred to ASIC”.
The Chant West analysis said that asset allocations rather than fees have been the main differentiator between industry superannuation fund and retail master trusts over recent years and that the claims being used by industry funds based on “net benefit to members” could mislead members of retail master trusts.
Chant said that while industry funds could justifiably claim an advantage, in the real world the magnitude of the advantage was much less than was being portrayed in their choice of superannuation fund advertisements.
He said that in circumstances where members of large and medium-sized employer plans paid no adviser commissions, industry superannuation funds could claim little advantage over medium-size plans and would have to acknowledge being at a disadvantage to large employer plans.
Chant said that there also needed to be further debate over the status of adviser commissions.
“There is considerable debate about whether adviser commission is really a distribution fee or a fee for advice,” he said. “If it is an advice fee, it is clearly unfair to include it in the net benefit calculation.”
