Super funds 'saved their own skins' at expense of members
Senator Jane Hume has slammed superannuation funds for creating rainy day funds that pay for potential penalties because of misconduct.
Hume points to a recent trend in which several super funds applied to the courts seeking permission to charge members a new fee that builds a financial contingency reserve.
Cbus recently made a request to the Supreme Court to allow it to change its rules and create a pool that pays for future fines.
Hume told an AFR conference that she is "closely watching" such funds.
"And let's not kid ourselves as to what this really is; taking member's money out of their retirement savings to set up a pool of funds - owned by the trustee - to ensure they can pay for penalties due to their own misconduct," she said.
She sees it as a "retrograde step" that creates a new category of fee charged to members.
"If it appears that trustees are confusing their own interests - saving their own skins - with the best financial interests of members whose money is unlikely to be imperilled by a change of trustee, I would expect regulators to take action. And the Parliament might too," Hume warned.
Elsewhere in her speech, Hume assured that the Compensation Scheme of Last Resort does not let banks off the hook.
CSLR, which covers unpaid compensation awarded as a result of misconduct relating to a targeted range of financial products and services, excludes managed investment schemes or other high risk financial products.
"We've made sure banks pay towards the cost of establishment of the CSLR, and I'm yet to see an example of a bank who has failed to pay an AFCA determination," she said.
Having a broad-based scheme on the other hand would inevitably be borne by other investors, that is the mum and dad investors and retirees.
"Everybody who makes sensible, cautious, informed investment decisions would end up having their returns clipped to underwrite people who punt their savings on emu farms, or tulips or other too-good-to-be-true high-return high-risk investments," she said.
"Now, if you want to punt a portion of your savings on something speculative - knock yourself out. No government should stand in your way. But you should be prepared to wear it when it goes wrong. And no government should pick up the tab with taxpayers' money nor force industry - and thereby ultimately other savers - to underwrite any and every investment that consumers choose to make."
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