Unions split over banks’ super role

The peak body representing financial advisers has threatened legal action over reforms designed to push unqualified advisers out.

A rift has opened up between the bank-bashing ACTU and the ­Finance Sector Union over a campaign to ban banks from managing Australian retirement savings.

The move comes as the peak body representing financial advisers has threatened legal action over reforms designed to push unqualified advisers out.

The Morrison government wants to push through laws including a new code of ethics and education standards for the financial advice sector, compiled by the Financial Standards and Ethics Authority (FASEA), a body set up by parliament in early 2013.

In a letter to members of parliament last week and obtained by The Australian, FSU national assistant secretary Nathan Rees urges MPs and senators to block the reforms, which FASEA will unveil in the next few weeks.

“The reforms, as they stand, will force many thousands of planners out of the industry. Ultimately, this will see a market for planning advice in which fees for clients will rise,” Mr Rees said.

He said the higher standards would also have a “disproportionately negative impact” on women and their families, who would “not be able to complete the required study part-time within the time frame” proposed by FASEA, which has a deadline for compliance with the new education requirements by the start of 2024.  He said there might be “grounds to file a case” against the new proposals in the anti-discrimination commission and argues for the reforms to be delayed until further consultation is held.

Under the reforms, advisers with no degree would need to study eight subjects to get a graduate diploma. The rules could force thousands of underqualified ­advisers from the sector.

Meanwhile, the FSU’s submission to the royal commission’s round of hearings on the $2.7 trillion superannuation system argues against moves to end the vertically integrated bank model, where large conglomerates can cross-sell products sold by their own various divisions.

“The union does not submit that there is a need to impose a structural change of entities,” the submission told commissioner Kenneth Hayne. “Indeed, structural change will often be the cheap option with illusory effects.”

The FSU said that even though super funds that were subsidiaries of banks that ran on a for-profit model faced “inherent problems due to conflicts” between serving savers and shareholders, “the union submits that such conflicts are manageable”.

“The problematic behaviour was the effective quasi-endorsement (without consideration of the circumstances of customers) of a superannuation product, rather than the bank’s ownership of the product,” the FSU said.

The ACTU has been campaigning to “ban banks from super”.

Its campaign reads: “Retirement savings are too important to risk putting in the hands of big banks. Tell the Liberal government to ban the banks from super.”

However, the ACTU failed to make a submission to the royal commission’s superannuation round, or respond to the its interim report, which is using submissions to inform path forward for cleaning up the sector.