The Commonwealth Bank of Australia (CommBank) will make superannuation and pension fund members foot the $80 million bill for its regulatory compliance, in a fee grab described by Financial Services Minister Kelly O’Dwyer as an “out-and-out gouge”.
A letter from the bank’s primary super fund Colonial First State told members they would be charged a “regulatory reform fee” of $102.40 next month. The new charge will cover what the bank described as “highly technical and complex” regulatory reforms.
According to figures from the Australian Prudential Regulation Authority (APRA), if the fee is passed on to all 780,000 Colonial First State accounts, it would raise around $79.95 million.
“The nature of these regulatory reforms mean we have invested significant resources ensuring we comply with them and we expect new reforms will continue to be introduced across the industry over the coming years,” says the bank’s letter.
This is a hike from the previous regulatory reform fee which was capped at $40. This new charge is on top of existing administration and investment fees.
Commonwealth Private clients also received a similar letter.
“This letter, on the face of it appears to be an out-and-out gouge of Commonwealth Bank customers. I cannot see on what basis they would be imposing this fee on customers,” Ms O’Dwyer told Fairfax Media.
“Compliance with the law is the cost of business, it shouldn’t be paid for using members’ retirement savings. There are clearly many other funds that are not choosing to charge members additional fees and members should consider whether their current fund is the best fit for them.”
Ms O’Dwyer expressed concern at the CommBank fee hike, saying that the Coalition is working on capping or banning such administration and investment fees, as well as inappropriate insurance fees.
While other super funds run by the Big Four banks plan to pass on some of the cost of regulation, the fees being charged are considerably lower.
CommBank claims that the charge is consistent with other super funds in the industry; however, Westpac-owned BT charged its customers an average of $26 last year to cover regulatory compliance. ANZ’s OnePath fund has a similar fee and NAB-owned MLC says it does not have plans to charge its customers for compliance.
An Industry Super Australia spokesperson says not-for-profit industry funds are subject to the same regulations, but he was not aware that they charged fees to cover regulatory compliance.
Considering CommBank’s misconduct was one of the primary reasons behind the banking royal commission, it seems unfair that the bank will pass on the cost of reform to its customers.
“It does seem weird that the government introduced regulatory reforms hoping to improve things, then they [CommBank] come along and say there’s a special charge for that,” said Alex Dunnin, Research Director at superannuation analysis firm Rainmaker Information.
CommBank confirmed the $102.50 figure, saying it was investing billions in implementing reforms.
“Every year we assess all regulatory reform expenses to ensure we can make the required changes and are only recovering from customers a portion of the costs incurred,’’ said a CommBank spokesperson.
Do you think it’s fair that you’re asked to pay a fee to cover the cost of CommBank’s misconduct?