Money Your Super Banks’ scandals have cost the community $480m, says Industry Super Australia

Banks’ scandals have cost the community $480m, says Industry Super Australia

Bank scandals.
Bank scandals have cost the community dearly. Photo: Getty
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Scandals, alleged misconduct, and poor financial advice have cost major banks and insurance companies almost half a billion dollars in payouts and compensation over the past two years, according to research by Industry Super Australia.

The largely union-backed umbrella group is using the rising payouts bill for banks and insurers in its ongoing battle to thwart moves by the Federal Government to overhaul the composition of superannuation fund boards to mandate that at least a third of trustees are independent.

In addition to shaking up the role of trustees, the Government is also pushing to ensure the chairs of super boards are independent.

Evidence to be presented to a Senate committee examining the governance of super fund boards will claim that banks and insurers paid out more than $480 million in compensation, reimbursements and refunds for alleged financial misconduct.

No scandals, no complaints

ISA public affairs chief Matt Linden will present the scandals line by line, which include $200 million of “money for nothing” compensation after banks charged advice fees but provided no service to clients.

“These are only the things that have been made public, where there’s been admitted fault,” Mr Linden told the ABC.

“It doesn’t include scandals that we’ve seen on the front page recently around things like alleged money laundering.

“We certainly do not accept the proposition that mandating a particular quota of independent directors drawn from the finance sector is a sensible way to improve outcomes for industry super fund members.”

Key brands named by Industry Super Australia include flashpoints of recent scandals such as CommInsure, Commonwealth Bank, ANZ, Westpac, National Australia Bank, Bankwest, and AMP.

Industry Super Australia (ISA) argues that, in contrast, not-for-profit industry funds have avoided scandals and continue to outperform funds owned by banks and insurers.

As the Government attempts to push through changes to trustee arrangements, ISA maintains that the “equal representation model”, where trustees are split between employers and worker representatives, continues to be used by the world’s top performing super funds.

Businessman and former ACCC CEO, Graeme Samuel, told the Senate committee that independent directors had not saved the Commonwealth Bank from a range of scandals.

Mr Samuel is one of three outside experts examining CBA’s money laundering scandal. “What’s far more relevant, I think, is a whole question that relates to systems and processes, culture, and frankly the quality of directors concerned,” The Australian reported Mr Samuel as saying.

Financial Services Minister Kelly O’Dywer has consistently rejected claims that the push to overhaul super boards is part of an ideological union busting mission.

Ms O’Dwyer recently announced the superannuation overhaul bills would be reintroduced after being defeated in 2015 by the Senate crossbench, led by senator Nick Xenophon.

However, Mr Linden is confident of once again winning support to block the legislation. “When I’ve talked to those crossbenchers, they have not had people walking in their doors complaining about the returns they’re getting from industry super funds,” Mr Linden said. “However, they’d had dozens come in their doors [who] have been ripped off in scandals perpetrated by the banks.”

The payouts are based on public information and cover a two-year period from September 2015, but do not include private settlements or payments made to financial literacy or community programs.

The Government is also facing a fightback from other parties such as the Australian Institute of Superannuation Trustees.

“It is inappropriate to mandate a governance model to apply to all superannuation funds because no evidence has been presented that the current system is failing or that mandating independence would be beneficial,” the AIST submission says.

ISA research found 70 per cent of independent directors are either current or former chief executives, with 60 per cent coming from banking or resource sectors.


The New Daily is owned by industry super funds