FSC’s Loane rejects Whiteley claims

The Financial Services Council (FSC) has dismissed claims by Industry Super Australia (ISA) that three inquiries have specifically backed the existing default funds under modern awards regime, stating that the opposite is actually the case.

The FSC's new chief executive, Sally Loane has written a letter in which she says claims contained in a media release issued by ISA chief executive, David Whiteley, are wrong and that "the review have in fact been critical of the role of the Fair Work Commission in selecting default funds".

"The Financial System Inquiry recommended a transparent and competitive process which "would remove the role of the industrial relations system in selecting default funds and better align incentives between employers and employees"," Loane's letter said.

Further, she wrote that an inquiry by the Productivity Commission found that the process was not transparent and that its report stated that the "current default superannuation fund arrangements in modern awards should be improved to promote the best interests of members".

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"The Cooper Review of superannuation called for further examination of whether the default process was transparent and competitive," Loane's letter said. "It noted that ‘naming a particular fund in an award when there has been no transparent, formal selection process would appear to inhibit competition and delivers a significant advantage to the fund named'."

"The Fair Work Commission selection process maintains the same conflicts of interest that protect industry funds from competition. This is to the detriment of consumers," the FSC chief executive's letter said.