This newsletter was to be about employee financial well-being. However, with the Banking Royal Commission turning to superannuation this week, and Roll-it Super presenting at the Productivity Commission public hearing last month, plans changed.
Hell hath no fury like a bureaucrat scorned
American economist Milton Friedman wasn't a supporter of government intervention into free markets. His theory was that in a perfectly competitive market, the pursuit of self-interest would result in an efficient allocation of resources and optimal social benefit.
The problem is that Friedman's theory assumed everyone has the same information, no one individual can influence price, transaction costs are low, and there are no externalities (someone else bearing the cost from your commercial activity).
Unfortunately markets aren't perfect and acting in your own self-interest is not always in the public good. When markets fail, bureaucrats intervene to protect consumer and public interests.
Some of Australia's largest and most trusted financial institutions have gone further than self-interest and have deceived customers and regulators. So what will bureaucrats do next? In the words of Mr.T.
I pity the fool... my prediction? Pain
Banking Royal Commission
A phone call to join Kenneth Hayne and his impressive council assisting Rowena Orr QC and Michael Hodge QC would strike fear into any corporate executive.
For those of you who don't enjoy their morning coffee watching the live Banking Royal Commission webcast, two words separate this inquiry from previous bureaucratic undertakings.
The result of an ASIC enforceable undertaking typically involves a corporate fine and commitment to clean up your act - without admitting you did anything wrong. Not so with the Banking Royal Commission. The recommendation is that individuals who made business decisions to charge customers for services that could not or would not be provided should face criminal prosecution.
Most superannuation fund trustees genuinely believe they have their members best interests at heart. However belief is the not the same as evidence, and the evidence is that some superannuation fund trustees are lawfully, ethically and morally conflicted, unable to put member interests before commercial self-interest.
My hope is that the prospect of criminal charges and tougher regulatory oversight forces pro-active leadership from those running our super funds. Let the days of selling under-performing super products to unsuspecting employers and employees through conflicted financial advisers and 'free' employer HR and benefit platforms be numbered.
For the superannuation industry it doesn't stop a the Banking Royal Commission. Kenneth Hayne has nothing on the changes recommended by Productivity Commissioners Karen Chester and Angela MacRae.
In June, another fine bureaucratic institution, The Productivity Commission, released their Draft Report into Superannuation. The report was an exceptional assessment of the sector and we are strong supporters of the recommendations.
I had the privilege of presenting to Commissioners Karen Chester and Angela MacRae at the Melbourne public hearing.
The proposed assisted employee choice model is an excellent step towards improving retirement outcomes for everyday Australians.
This model creates a short-list of ‘best in show’ default super funds that ensures disengaged members are not forced into under-performing products by enterprise workplace agreements, or employers either ill-equipped to select a quality fund, or conflicted and failing to act for the sole benefit of employees.
Employee choice of super fund is why Roll-it Super exists. Our submission responded to Productivity Commission recommendations with suggestions that facilitated private enterprise innovation to further member interests and achieve universal participation.
Click on the button below to read our submission.
I'm off to grab a coffee and watch the Banking Royal Commission webcast. Next newsletter, employee financial well-being.
If you have any feedback drop me an email or give me a call.
M: 0451 308 170
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