MEET the bank bosses entrusted with growing your retirement nest egg and superannuation whose companies are now being forced to repay $1 billion in fees rorted from customers.
They’ve pocketed annual pay and perks of up to $4.025 million — while some superannuation trustees receive $25,000 just for turning up to a monthly board meeting.
The banking royal commission has heard evidence they are failing their purpose of acting in members’ best interests.
The Big Four banks have been slammed in the royal commission for using superannuation members’ money to boost profits and deliver shareholder returns, with executives pocketing mega bonuses.
CBA is repaying $143.3 million to wrongly charged customers — including dead customers
In a scathing assessment of the for-profit bank-owned superfunds released last month, counsel assisting the royal commission Michael Hodge said it was open for commissioner Kenneth Hayne to find that NAB and CBA breach the law in operating their super funds.
The group executives in charge of superannuation are the heads of the Big Four banks’ wealth divisions and take home a total of almost $11 million in annual pay and perks.
Even the lowest paid among them took home $1.6 million and must report into the CEO.
But Ian Silk, the top boss at the nation’s biggest superannuation organisation, industry fund Australian Super, earned substantially less — a total package of $887,142 for managing $140 billion in members’ assets.
His fund delivered 5 per cent average annual returns for the past decade, but the best the Big Four-owned funds could return was 3 per cent or less over the same period, just above the current rate of inflation, 2.1 per cent.
During two weeks of hearings earlier this month into the $2.6 trillion sector, Mr Hodge exposed NAB as having one of the most appalling records for billing its customers yet providing no service in return.
The bank’s superannuation trustee company Nulis is paying $110 million back to members charged fees for no service, while parent bank NAB is paying another $71 million in remediation and customer compensation, Australian Securities and Investments Commission records show.
Andrew Hagger was the boss of NAB’s customer and wealth division, and in the 2017 financial year earned a base salary $1.218m but pocketed massive incentive rewards, including a half a million dollar cash bonus, to take home a total of $2.822 million.
In his closing submission last month, Mr Hodge did not accept that Mr Hagger _ who drives a blue Maserati GranTurismo and lists his address as a multimillion-dollar mansion in the exclusive outer Melbourne suburb of Lower Plenty _ was wrong to claim his dealings with corporate regulators were “open and transparent”.
A spokesman for NAB said Mr Hagger had not had oversight of superannuation for two years.
Mr Hagger and his senior team’s behaviour also demonstrated a disregard for his superfund members, regulators and the law, Mr Hodge said.
NAB’s woes worsened on Thursday with fresh legal action from ASIC accusing the bank of false and misleading conduct for the wrongful charges, raising the prospect the bank would face millions of dollars in fines.
Chair of Nulis is Nicole Smith, who earned $302,500 in 2016 financial year and $285,000 in 2017 financial year, after pocketing whopping 37 per cent increase in fees in 2015.
Mr Hodge also slammed the Commonwealth Bank in his closing submission, recommending a finding that CBA had committed 13,000 criminal offences by failing to transfer members from high-fee funds to low-fee MySuper accounts by the deadline of January 2014.
CBA is repaying $143.3 million to wrongly charged customers — including dead customers — but it’s not clear how much of that is due to members of its superannuation funds, which include Colonial First State and Colonial Mutual funds.
Annabel Spring was boss of CBA’s wealth division until December last year on an annual base salary of $1 million.
In her final six months at the bank she walked away with $4.025 million, including $1.37 million in termination benefits. She lives in an $11.5 million mansion at Centennial Park.
Ms Spring did not give evidence at the royal commission but the lower ranking boss of CBA’s superannuation brands Colonial First State and Colonial Mutual, Linda Elkins did.
Ms Elkins, who in previous financial planning royal commission hearings accepted the bank was “gold medallist” in fees for no service, earned $441,000 base salary and $650,000 in fees as a trustee of three funds in the 2016 financial year (she worked part year).
She was grilled about charging dead people and 15000 counts of potential law breaches by failing to transfer customers to lower cost superfunds.
Westpac superannuation sits under BT financial, run by Brad Cooper, who earned $2.67 million in pay and perks in the 2017 financial year.
BT was not called to give evidence in the royal commission’s superannuation hearings because of an ongoing court case over customer ripoffs.
ASIC has commenced civil action in the Federal Court against Westpac alleging it used bonuses and “highly sophisticated techniques” in its “super activation campaign” to get customers to transfer their external super into BT accounts, despite it potentially being a worse deal for them.
Westpac is the only bank of the Big Four which is keeping its wealth division, with all the others getting rid of them.
ANZ is selling its wealth division for $975 million to IOOF, who’s managing director Chris Kelaher earned $3.036m in pay and perks in the 2017 financial year and faced a grilling over conflicts of interest at the royal commission superannuation hearings.
ANZ’s boss of wealth Alexis George is overseeing the massive sale to IOOF has been promoted to deputy chief executive. She earned $1.577 million in pay and perks for 10 months in the job in the 2017 financial year.
ANZ has promised to pay $59.2 million back to customers charged fees for services they never received.
AMP remains the worst offender for charging fees for no service in financial advice, telling ASIC it expects to pay back a total of $360 million in false fees.
Paul Sainsbury is AMP’s Group executive Wealth Solutions and Customer and in the 2017 financial year earned a base salary of $965,000, but thanks to generous bonus payments awarded because he delivered strong shareholder returns, he pocketed $3.498 million. AMP has denied Mr Hodge’s conclusions that it may have breached its obligations to superannuation members.
Asic’s deputy chair Peter Kell told the royal commission banks and financial institutions would in total end up paying back $1 billion to customers wrongly charged fees for no service.
In his opening address Mr Hodge said trustees of superannuation funds are obliged to act in the best interest of members but due to regulation gaps are “left alone in the dark with our money”.
“Trustees are surrounded by temptation: to preference in the interests of their sponsoring organisations; to act in the interests of other parts of their corporate group; to choose profit over the interests of members,” Mr Hodge said.
The banks have until Friday to respond to Mr Hodge’s damning findings.
EARN vs. RETURN
Superannuation trustee boards 2016/2017
NAB
Chair Nicole Smith: $285,000
Total board fees: $1.534m (nine members)
10 year returns to members: 2.5%
Assets: $19b
Westpac’s BT Financial
Chair David Plumb: $190,890
Executive director John Shuttleworth: $595,745
Executive director Melinda Howes: $677,265
Total board fees: $1.924m (six members)
10 year returns to members: 2.6%
Assets: $92.2b
CBA’s Colonial First State
Chair Anne Ward: $267,264
Executive director Linda Elkins (part year): $133,607
Total board fees: $1.042m (six members)
10 year returns to members: 3%
Assets: $106b
ANZ’s OnePath and Oasis Fund Management
Chair Victoria Weekes: $146,184
Total board fees: $698,169 (five members)
10 year returns to members: 2.8%
Assets: $46.7b