Industry Super Australia’s (ISA) support of the current MySuper 'quality filter’ has been condemned by the Financial Services Council, which says the default fund selection tool provides little benefit for employers.
Earlier this week, ISA’s chief executive David Whiteley said removing the so-called 'quality filter’ would lead to unreasonable costs for employers, with added due diligence required to select from a pool of up to 120 funds.
But FSC senior policy manager Blake Briggs said the claims were “completely wrong” and stressed employers had no obligation to search for a new fund under the FSC’s proposal.
“Under the FSC proposal, any employer can continue to pay into the default MySuper fund they currently use, so that means there is no search cost – zero, none whatsoever,” he said.
“They can continue to use their current arrangements until they want to change voluntarily.
“It is completely wrong to say there are search costs, when you don’t have to do any searching.”
Briggs said it is “inappropriate” to label the method of narrowing the pool of funds from 120 to between two and 15 a “quality filter”, as it unfairly favours industry funds and operates on incomplete information.
“To say that it’s a quality filter is entirely wrong, because to be able to determine between the quality of different products you would have to be able to understand the products and the Fair Work Commission just doesn’t have the expertise to fulfil that role,” he said.
