‘Better-off’ test needed for super advice


By Ra’Eesah Lillah

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Major banks cross-selling superannuation to customers should face a ‘better off’ test to ensure consumers are not switched from better performing funds, following the failure of the Sedgwick review to tackle such tactics by the banks, according to Industry Super Australia (ISA).

Responding to the release of the review, which was commissioned by the Australian Bankers Association, ISA chief executive David Whiteley said a ban on sales incentives for bank staff and a ‘better off’ test was necessary to protect consumers from cross-selling, as staff were not to blame in an internal culture that incentivised them to ignore customer needs.

“Australians shouldn’t walk out of a bank branch worse off than when they walked in,” he said.

In his final report released this week, former Australian Public Service commissioner Stephen Sedgwick found no conclusive evidence that there were ‘systemic risks’ that justified an outright ban on cross-selling within the major banks.

“Nonetheless some current practices carry an unacceptable risk of promoting behaviour that is inconsistent with the interests of customers and should be changed,” he said.

“I suggest that each bank implement these proposals in their own institution irrespective of whether they perceive other banks are moving similarly.

“Each bank has a responsibility to its customers and shareholders to nurture trust in their institution. Decisive action will signal that it stands for ‘doing the right thing’ irrespective of what approaches its competitors adopt.”

In his remarks within the report, Sedgwick also recommended a further independent review be conducted within three years to assess banks’ progress in improving sales practices.

ISA claimed that failure to consider super in the review would allow banks to continue to attempt to “get their hands on more workers’ super”.

Whiteley said if the banks did not urgently address the cross-selling of compulsory super, the government needed to intervene.

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