Sally McManus urges industry super funds to rethink relationship with big banks

ACTU secretary Sally McManus has urged industry super funds to reconsider their links with the major banks.

ACTU Secretary Sally McManus. Picture: Kym Smith.

ACTU secretary Sally McManus has urged industry superannuation funds to reconsider their relationships with the major banks in the wake of the revelations at the financial services royal commission.

Ms McManus today wrote to fund chief executives asking them to reconsider their commercial relationships with the “dodgy” banks, saying she had been “appalled by the outrageous and illegal behaviour” uncovered by the commission.

Superannuation funds have billions of dollars of bank stocks in their Australian share portfolios.

She said industry superannuation funds controlled the retirement savings of millions of Australians, and had consistently outperformed the for-profit funds run by the banks.

“Working people in Australia gave up pay rises in order to get universal superannuation off the ground to provide access to a dignified retirement for everyone,’’ she said.

“In light of the revelations of the past weeks at the Banking Royal Commission, I am asking Industry Super Fund CEOs to reconsider their commercial relationships with banks.

“The retirement savings of working people should not be used to prop organisations that house rotten, corrupt and unethical behaviours like those revealed over the past weeks.”

In her letter, she says a superannuation fund, and organisations the fund has a commercial relationship with, might have considerable direct and indirect relationships with one of the banks or service providers.

“Should this be the case, on behalf of the trade union members of your fund I am requesting that you review and consider these relationships, in accordance with your existing (environmental, social and governance) policies and procedures, unequivocally clarifying the expectations and interest of your funds members should you consider it appropriate for these relationships to continue,’’ she says.

According to financial services information company Rainmaker, bank stocks account for an estimated 25 per cent of the Australian share portfolios of not for profit superannuation funds.

Alex Dunnin, executive director of research and compliance at Rainmaker, said major investors in Australian shares had almost no choice but to invest in banks given the financial sector was one-third of the ASX.

“So whether industry funds like it or not they are entwined with the banking sector as either customers or shareholders, which is ironic if you consider how passionately industry funds and bank-owned funds compete with each other,’’ he said.

“Where it gets complicated for the industry funds is that even if they wanted to divest from the banks it will be hard to find another part of the economy big enough to absorb their capital.”

ACTU Secretary Sally McManus. Picture: Kym Smith.