Banks have been accused of skirting rules aimed at ensuring customers are better off when they sell superannuation directly to customers in their branches.
But unsurprisingly, the banks say selling super to customers in branches can be helpful, as long as staff are appropriately trained.
The banking royal commission asked for submissions on whether it is appropriate that superannuation be sold through bank branches, and whether the outcome was in the best interests of consumers.
Industry Super Australia said banks aren’t prevented from giving their staff bonuses for selling super, or setting performance targets involving super for branches.
“Bank staff are not required to act in customers’ best interests, therefore bank staff selling the products may have the ability and incentive to sell products that are to the detriment of consumers,” ISA’s submission said.
The Australian Institute of Superannuation Trustees said banks were direct-selling superannuation in a bid to avoid the rules requiring them to act in the best interests of customers.
“It is not appropriate that superannuation be sold through bank branches as a deliberate strategy to circumvent duties on advisers and funds to act in the best interests of members,” the trustees’ submission said.
“It is not reasonable to think there is any prospect that this is likely to produce an outcome that is in the best interests of members.”
But Westpac argued properly trained and supervised branch staff can sell super under “appropriate controls”.
“It is appropriate and beneficial for some relatively simple superannuation products to be sold through bank branches and is consistent with the best interests of the customer,” Westpac’s submission said.
National Australia Bank said it doesn’t have any programs in place telling staff to sell its super fund NULIS.
But it said branch staff telling customers that such products are available is not “inherently problematic”, and could even prove beneficial.
“The provision of financial advice in relation to superannuation through suitably qualified branch staff may render such advice services more accessible to the average superannuation member,” it wrote.
AMP doesn’t have bank branches, but provides other general advice relating to superannuation and believes it should continue to be able to do so.
ANZ believes distributing superannuation through a range of channels including bank branches is “appropriate”.
The Australian Securities and Investment Commission said one solution would be to make all superannuation products of a similar high value, so it didn’t matter where they were sold.