A new poll shows that seven out of 10 Australians do not trust banks to manage their super, with consumers saying that they want their interests looked after rather than those of the shareholders.
The Essential poll over 1000 people was conducted on behalf of Industry Super Australia. Results of the poll revealed that just 31 per cent of Australians have any trust that banks could ensure that the superannuation system works fairly. Two-thirds of those surveyed want super to operate on a not-for-profit basis, with all returns going to fund members.
The poll also revealed that 38 per cent of those questioned trust the Federal Government with their super, compared to a whopping 69 per cent who trust Industry Super Funds.
The results of the poll send a clear message that, when it comes to super, Australians want their interests to be the sole focus of their funds, rather than a profit-making venture for banks. In fact, 58 per cent of respondents believe that the banks would use the superannuation system to exploit fund members.
“When it comes to super, the banks are legally required to act in the best interest of their customers; most Australians don’t believe they do,” said Industry Super Australia Chief, David Whiteley.
“Consumers know aggressive cross-selling of advice, insurance and super is designed to boost shareholder profits rather than leave them better off.
“The banks’ relentless lobbying to remove consumer default protections could result in people ending up in under-performing funds and a nest egg that’s tens, even hundreds, of thousands of dollars short.
“Australians have told us what they think – they don’t trust the banks and believe their culture and profit motive are at odds with the purpose of super.”
Two-thirds of respondents said that the banks were already too powerful and that giving them power of superannuation would make the situation worse.
“Public opinion clearly runs counter to the banks’ efforts to change the super system to suit their vertically integrated business models. Astute policymakers will be listening,” said Mr Whiteley.
The results of this survey should come as no surprise. Think rate cut delays, dodgy financial advice and limited customer service and ask: what has my bank done to earn my trust?
The 2016 Global Consumer Banking Survey already revealed that just 22 per cent of people actually trust their bank to give them unbiased advice. Hardly a sign of confidence, wouldn’t you say?
It’s become a sore point for many Australians that the Reserve Bank of Australia drops the cash rate, but banks wait two or three weeks, sometimes longer, to drop the rates for customers who have mortgages and loans – and then not always passing on the full cut.
It’s a well-known fact that, as a result of these rate cut delays, banks consistently pocket millions at the expense of their customers. Now, how is that earning anyone’s trust?
Add to that sneaky account charges resulting from convoluted fine print, often limited customer service and questionable financial advice from many bank advisors, and you have a few more examples of the type of poor practice for which many of Australia’s banks are becoming known.
And the fact that these banks are openly ‘in it for the money’, well, the idea of handing them the reins to our superannuation system seems ridiculous.
Many Australians move into retirement with limited super providing their income. So, every dollar counts. Splitting those dollars with major shareholders and bank CEOs is not a viable option for most Australians. They simply can’t afford it.
And when we take into account that industry super funds regularly outperform bank and retail funds, there seems little argument about where your life savings are better positioned.
It is a sentiment reflected by many Australian retirees. In the YourLifeChoices Retirement in Australia 2016 survey, members reported that they had their super managed in the following manner:
- industry super fund: 36 per cent
- retail super fund: 16 per cent
- self-managed super fund: 10 per cent
- other (such as defined benefits scheme): 15 per cent
- no super: 23 per cent
With twice as many respondents having their money in industry super funds than retail funds, how the banks are even in the running to have more power over super is simply bewildering.
And yet it seems that, not only is the Government unwilling to hold the banks accountable for dodgy practices and bad behaviour, it may actually be considering handing them this added power.
Do you think the big banks should keep their snouts out of super? Do you trust your bank? Would you trust it with your super? Should the Government even be considering handing the banks increased power over the superannuation system?