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Super industry takes aim at big four banks

AAP logoAAP 4/10/2016

The big four banks have been luring people away from industry super funds and into poorer performing super products, an industry super advocacy group claims.

Industry Super Australia says there has been a significant increase in people signing up to bank-owned super funds as the major banks ramp up their over-the-counter superannuation sales advice.

Industry Super's chief executive David Whiteley says the banks' super products typically delivered lower investment returns than industry super funds.

"There's a real risk now of people walking into a bank and ending up as a member of a super fund that is worse than the fund they were already a member of," he told AAP on Tuesday.

"The implication for the consumer is that they'll retire with less, or they may have to work longer, or they will become more reliant on the aged pension."

Mr Whiteley said the group's analysis of data from Roy Morgan Research found that the big four banks had doubled their over-the-counter super sales advice between 2011 and 2015.

"The figures show direct advice is growing quickly and at the expense of traditional channels including financial advisers," he said.

The research also found that customers were being switched from funds with higher net satisfaction and performance into funds with lower satisfaction and performance, he said.

And, unlike financial advisers, bank staff, who are often given incentives to sell the super products, don't have to meet best interest obligations, he said.

"General advice direct from a bank does not need to meet the best interest obligations and it is likely the banks are using this and linked sales incentives to funnel customers into underperforming funds."

Industry Super Australia wants banks to be required to perform a better-off test to demonstrate a customer would not be worse off if they switched funds.

It also wants a ban on all sales incentives relating to superannuation.

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