Super inquiry week one: what we’ve learned so far

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The banking royal commission shone its spotlight on super last week, uncovering shocking behaviour from bank-owned funds and effectively excusing industry funds. Here’s what we’ve learnt so far from week one of the inquiry’s look at super.

NAB trustee thought it was okay to wrongly take money from customers’ funds
Nicole Smith, the National Australia Bank’s (NAB) former chair of the trustee Nulis, didn’t think it was a crime to take fees for no service from fund holders.

NAB was grilled during the week, and on the third day of questioning, Commissioner Kenneth Hayne suggested criminal behaviour may have taken place over NAB’s part in the ‘fees for no service’ scandal.

When counsel Michael Hodge QC questioned Ms Smith, he asked her if she was in a “hopelessly conflicted position” in asking NAB-related entities to investigate the fraud. These same entities were being asked to investigate, then potentially return millions of dollars in fees fleeced from customers who received no service.

The commission also heard that NAB had been accused of more than 100 counts of potentially criminal behaviour last year, many involving charging fees to super customers for services not provided or to customers who were dead.

NAB’s lawyers, who have been accused of being very “unhelpful” in the lead up to the hearing, repeatedly tried to prevent the public disclosure of damaging documents, but they were unsuccessful.

The bank is also currently paying more than $100 million in compensation to customers who were charged for advice even though they didn’t have an adviser linked to their account.

The evidence against NAB’s activities was so appalling that chief executive Andrew Thorburn was forced to make a public apology.

Long-awaited testimony from industry fund giant an anti-climax
While there may have been speculation that the Government added superannuation to the banking royal commission in order to embarrass industry funds, so far, these funds have gotten off relatively scot free.

The head of Australia’s largest super fund, Ian Silk, took the stand last week to answer questions about whether AustralianSuper may have mishandled customer savings.

Mr Silk’s testimony was highly anticipated, but proved to be anti-climactic, after the two issues expected to bring the fund into disrepute were almost lackadaisically swiped aside with open, unrepentant and perfectly justifiable responses.

The commission was hoping to scrutinise AusSuper’s decision to spend $2 million of member fees to start up online publication The New Daily.

Mr Silk said the publication was created to help increase financial literacy and was not intended to be a “thoughtless cheerleader” for industry super funds. But he did say the publication would promote the “positive features” of industry funds “when the facts warrant it”.

“The intention was to provide an online publication that was directed at … middle Australia,” he told the commission.

“[It is] directed at the sort of people who are the bread-and-butter members of the industry funds, and in our case, members of AustralianSuper, not working class, but working Australia”. 

When asked if owning an online media publication was preferable to reducing member administration fees, Mr Silk said: “We don’t splash around members money lightly. It was made on the basis that our judgement that a relatively small amount of money in the context of our multi-pronged approach was worth spending.”

Mr Silk said funding of The New Daily costs members 20 cents a year – or less than the cost of mailing each member a letter.

He was also called out for funding the ‘Fox and Henhouse’ advertising campaign in March last year.

The advertisement attacked the major banks for lobbying to overhaul the default super fund system, which Mr Silk said would have had dire consequences for working Australians.

“The purpose of the advertisement was to … prevent the lobbying effort that was being undertaken by retail wealth management companies, in particular the big banks, to change the default system from a framework that we say provided significant protection for workers to one that exposed workers to significant risks of mis-selling, cross-selling and conflicts of interest that would have done them significant damage,” said Mr Silk.

He claimed it was a public policy issue and the advertisement served the best interests of Australians. The commission seemed to agree and did not criticise him for it.

Super fund director fees going back to unions
According to the chair of Energy Super’s trustee, Scott Wilson, many employed union officials sitting on super boards donate their director’s fees to their employing union, although Mr Wilson keeps his. He says the arrangement is to compensate the union for the time a staff member spends on super related work.

CBUS gets off scot free
Many were anticipating the prospect of getting stuck into industry mega-fund CBUS. The fund is linked to the Construction Forestry Mining Energy Union (CFMEU) and the Maritime Union of Australia (MUA) and has $46 billion under management.

The royal commission requested the fund’s books, examined them and promptly excused them.

IOOF fails the ‘pub test’ for compensation payments
The commission ended the week by putting for-profit fund IOOF in the hot seat, investigating conflicts of interest whereby IOOF put profits before members’ interests, and potentially used the super fund to compensate its members for losses they suffered following a $6.1 million payment stuff-up.

IOOF chief executive Chris Kelaher gave the “pub test” excuse when addressing concerns that the repayment procedure was a “significant breach” of corporate law.

Mr Kelaher maintained that IOOF had fulfilled its “primary goal” of restoring members accounts by compensating them – even though it was with their own money.

“You used the members’ money to purportedly compensate them, you know that don’t you,” asked assisting counsel Mr Hodge.

“No, I don’t agree with you,” Mr Kelaher replied.

IOOF was also questioned about further conflicts of interest and customer fees, and governance and transparency issues.

“What happens when we leave these trustees alone in the dark with our money?”
That was another question asked by Mr Hodge, who warned that trustees are expected to act in a trustworthy manner and in the best interests of fund members. But he expressed serious concern that these same trustees operate in an opaque environment and are “surrounded by temptation” to mishandle member savings.

One thing we have learned is that Australians need to be more engaged with their super funds, checking for fees charged – especially duplicate administrative fees or for services that may, or may not have been rendered, and unnecessary or duplicate insurance policies attached to funds.

The investigation of the super industry continues this week.

Are you a member of any of these funds? What do you think of the news uncovered so far?

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Written by Leon Della Bosca

Leon Della Bosca is a voracious reader who loves words. You'll often find him spending time in galleries, writing, designing, painting, drawing, or photographing and documenting street art. He has a publishing and graphic design background and loves movies and music, but then, who doesn’t?



Total Comments: 49
  1. 0

    I hope this goes a lot further.
    The government trolls will likely do what they always do and come after Industry Funds. From what I read above it appears Industry Funds do not have a real case to answer. Whilst there may be questionable business decisions from Aussuper these are exactly that. Questionable, not fraudulent.
    I noticed CBUS got of “Scott free”. If you have allegations Leon then please air them but one might consider that if the inquiry did not pursue then nothing had come to light.
    Last is the payments to unions. Unless obscenely high there can be no objection to this as directors would be sucking large sums of money for attending meeting whilst union representatives are only drawing a salary in their job to keep the management honest. So what!
    I eagerly await if anything real comes out of this. I am sure there is a lot more here than so far uncovered. Let the blood letting begin and the real criminals be exposed.

    • 0

      Just like nothing much came to light with the banking commission , looks like there is nothing much to see here as well

      What really angers me is the amount of taxpayer money wasted on RC’s . Such a damn shame, its criminal

    • 0

      Actually a lot came to light with the banking RC. Out of all the Royal Commissions this government had the banking one was the only one which was not about destabilising Labor and the only one which Turnbull Inc. did everything to avoid/stop because it showed up the banking crooks for what everyone knows they are.

    • 0

      Agree MICK, a lot of appalling criminal conduct has come out and a lot more of criminal conduct will not come out…Again, I ask who audits the auditor?

    • 0

      “Just like nothing much came to light with the banking commission , looks like there is nothing much to see here as well”

      Trust a Lieberal shill to say that!

  2. 0

    Not much room for the trolls to move on this. It is as plain as the nose on their face.

    The solution is to educate the peasants on financial literacy. At least to a stage where they can make basic choices without a financial advisor becoming involved.

  3. 0

    Bring back regulation and this will stop.

    • 0

      Your comment applies to all business jackie.
      Whilst business sells itself as clean it’s just the opposite. They steal, they lie and they treat their customers like dirt until the media comes after them….when suddenly they have a change of heart.
      Indeed REGULATION is necessary as well as a real Ombudsman to make them pay if they try it on. We have a Telecommunications Ombudsman for example but this is a sham as the so called regulator is an industry body working for industry, not consumers.
      This is regulation when you’re not having regulation and appears to be a growth industry. Unlikely citizens are going to be treated any better, certainly not under the current business owned and directed government.

    • 0

      It’s not so much regulation that is needed – there is already regulation in place (else how can any institution be violating anything?) – it’s that the regulations need to be policed by an entity with the will, resources and the clout to do so.

    • 0

      A government with balls? Tell ‘im e’s dreamin’…..

  4. 0

    I always knew I was in super that was way above board

  5. 0

    There’s one thing consumers can always do. If they are not happy, and the institution does the wrong thing, take yore money elsewhere. The power of consumerism is rarely used by older people who don’t like change or are not aware enough of their rights, the products they have and what they can do when they are not happy. If I was in NAB i’d be pulling my money out of them where I could and going elsewhere to maybe a credit union. These big businesses are taking advantage of ignorance and using lies to try to cover up their actions. Do we educate ourselves or do we just hope for the best?

    • 0

      Agree but how many older people watch their bank or are aware of secret crooked business?
      Just like politics many older people who do not inform themselves get what they deserve. There is a price to pay for not worrying about the world and having the good life.

    • 0

      Bit harsh, Mick – older people, many of – simply want to not have to worry too much, and thus they fall into the trap of trusting the current crops of parasites and vultures whose only intent is to strip them to the bone…….

      I’ve mentioned it before – older people come mainly from a generation built on trust…… now that trust no longer exists in any sphere where there is money – government or business… and many are thus caught out.

    • 0

      That’s true, Trebor. I rmember a lot of my dad’s business was done on a handshake. Don’t think I’d like to try that now.

    • 0

      TREBOR – I am referring to the ‘average’ voter. Quite a few of us know crooked business when we see it but many others are oblivious to what can and will happen to them

    • 0

      Industry funds charge members for insurance they dont need and previously never offerred an opt-out option.
      Thieves !!!

  6. 0

    No Mick mine is industry

  7. 0

    I have tried both as to super and left a NAB. run super fund as we were being ripped off.We have now with A industry fund and doing great.Next move is to unload our bank shares and put all our funds into a credit union,ok we may loose a little but we are doing the right thing.

  8. 0

    Less revelation – more action.

    Grease up the guillotines, Igor… we’ve got a busy week ahead of us….

    • 0

      If there were real consequences then business would change. Because business controls the fate of politicians there is rarely any consequences other than having to find the next high paying job.
      Ask Ian Narev from CBA. He would have known exactly what was going on in his bank and he was never charged with anything despite very serious crimes including funding terrorism. It’s a mates club where the only thing that happens is public humiliation. Give me the money any day. That’s what happens. Some even get golden handshakes obscene as it is.

    • 0

      They should be RICO’d….

  9. 0

    I’m very happy with my retail fund that has given me 15% + returns the last 5 years

  10. 0

    “didn’t think it was a crime to take fees for no service from fund holders” or “from customers who were dead “

    –Really? …so it’s OK then, to rob a bank without a worry of being arrested for a crime?

    What other crimes have the super funds committed on pretense that “members have lost their savings due to downturn of the stock market”?

    –Who audits the auditor?

    • 0

      The top end of town mentality is hard to believe. If individuals did what some of these businesses did they’d be doing jail time. But because the same criminal theft comes form big business all that happens is finger pointed and public humility. The CEOs are never forced to pay a number of years salary back as a penalty. Why is ‘justice’ so unjust?????

    • 0

      Australia has legislated laws for crimes and it has legislated punishment guidelines for the judiciary.
      Whether a judge personally believes that the laws and punishments are unjust, it is irrelevant.
      The judiciary apply judgments and discretionary levels of punishment by what is legislated not what they believe ought to be.

      So the answer to your question is that Government House Representatives and Senators are the ones who create “justice” that is “unjust”.

    • 0

      I would like to thank our learned friend, HS, for bringing to the House this vexing question – while it is true that Professor Trebor has generated, in the past, a learned treatise on the very large, and often chasm-sized, differences between legislation, law and Law, and then of regulation based on legislation … no-one has to date raised the issue of which of these four components of governance are properly to be considered by courts – and thus by judges- and unfortunately at the lowest end, by magistrates.

      Should judges be considering issues of law and of punishment and such by the code of Law, as long governed in itself by the Rule of Law as derived over centuries since Magna Carta – and which stipulates that, above all, law developed from legislation… and thus regulation based on legislated law – can ONLY be acceptable and hold power in the land as long as it abides itself by the Rule of Law.

      On this basis – and on the accompanying basis that often law is not in accord with Law – is it not meet that judges , when the occasion warrants – do not accept the tenets laid down as law via legislation?

      It seems to me that in acting in accordance with Law and not law – judges may indeed levy punishment outside the parameters laid down via legislation.

    • 0

      Was it a crime for labor to send cheques to dead people ?

    • 0

      Nah – because they couldn’t cash them…… so they’d return to the fold unshorn…

      Unlike …. say …. robbing the dead….

    • 0

      How much was cashed Trebor

      WHat a wasteful irresponsible government

      Oh and dont forget the billions sent to people who had left Oz permanently

    • 0

      Only by the unscrupulous Dead Relative’s Society – who so far have all been caught by The Good Colonel C’Link – or so they say.

      If we’re discussing Kevin 07 Kash – that went into bank accounts….. and I’m sure would have been recovered by now, since The Good Colonel has had links to many things for years now – and while the mill may grind slow – it grinds very fine…

    • 0

      Hmmm – those who’ve left permanently but remain Australian citizens are still entitled to payments…….. anything else is just another fart bubble by a government intent on bringing down the Social Security bill while failing to address the real aspects of welfare provided to not only business and women and families, but also to themselves on a lavish scale.

    • 0

      Interesting point there Olbaid. I wonder how many dead people are still voting?

    • 0

      You’d think four or more years of LNP government controlling the AEC would have resolved that by now………..

      How many daughters are still picking up Mum’s pension a year after the funeral? What about all those social groups with cousins with similar names?

      No.. no.. that my cousin Duc Me Lo who die… this Me Duc Lo…. ha-ha – you westerner all look same.. you think we all look same?

      This cousin Achmed who die.. not Achmad… here Achmad right here.. you give him pension?

    • 0

      What about Hung Lo? and what about the bloke who claimed a disability pension when audited he dropped his pants in front of the welfare officer and said,” look at it…now do you believe me?” and then what about Van Bitch? She certainly was!

    • 0

      Wun Hung Lo or Thieu Hung Lo?

    • 0

      Your’e correct, it was Wun Hung Lo. Never thought about inquiring about Thieu Hung Lo

    • 0

      I see, I recognise you two are from the King family. It is you Wan and Joe isn’t it?

    • 0

      I’m a bit concerned about Hung Thieu Lo – could lead to knee problems late in life….

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