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APRA confirms retail shortfalls: AIST
Independent research from the Australian Prudential Regulation Authority (APRA) highlights the conflicting commercial arrangements in retail super funds that are eroding member benefits, according to Australian Institute of Superannuation Trustees (AIST) chief executive Fiona Reynolds.
“While these findings show that outsourcing in the not-for-profit sector delivers value to members, the opposite appears to be the case when retail funds outsource to related parties,” Reynolds said.
“We’ve known for some time that not-for-profit funds outperform their retail fund rivals. This latest research is proof that some retail funds are more interested in performing for shareholders than their own members.”
It was hoped the Government would adopt recommendations in the final phase of the Cooper Review that dealt with conflicted outsourcing arrangements, Reynolds said.
“The battle isn’t only about fees and commissions paid to financial advisers. It’s clear that without legislation, some funds will continue to feed their shareholders ahead of their members.”
The APRA research showed that some retail funds were using related-party administrators and paying significantly higher fees, almost doubling the median member’s cost load; and median retail funds were being charged 86 per cent more for asset allocation services than median not-for-profit funds, according to AIST.
AUTHOR
Mike Taylor
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