He wants the government to ban commissions across the superannuation and post-retirement sectors, and says that financial advice and product sales should be disaggregated so that financial planners can act in the best interests of their clients, rather than being held in a “vice-like grip” by retail funds. This is a view that’s vehemently opposed by Richard Gilbert, chief executive of the Investment and Financial Services Association (IFSA). “Don’t worry about the various components, worry about the total,” he says. “It’s what the consumer is paying that’s important – the rest of it is a smokescreen.”

Gilbert believes allowing competitive market forces to operate without interference is the only true way to bring down fees. He does not agree with the Australian Industrial Relations Commission’s decision not to run a competitive tender before choosing a range of default super funds for employers covered by modern awards. “One way to [reduce fees] is to allow competition in the default fund space instead of allowing monopolies and oligopolies,” Gilbert says. “Monopolies have never been known to reduce fees.

The fat is in – it’s called monopoly rent. I’ll challenge you to name a retail fund that has increased its fees in the last two years, but it’s easy to find a couple of industry funds that have increased their fees.” While some commentators have called for a ban on commissions on SG contributions, Gilbert says this misses the point. “I didn’t see any commission payments in the AIRC default fund outcomes in the 30 funds that were named, and that’s where the great bulk of SG is going to be determined,” he says. “Furthermore, if and when retail funds are given a chance to compete again and not be locked out, I wouldn’t expect them to be offering commissions, and those figures of 58, 60 and 70 basis points [offered by some retail funds] – there are no commissions in them.

So there’s a lot of spin around this, and it certainly hasn’t come from us.” Sherry will not be drawn on the solutions being considered as part of his review of the superannuation industry, which he refers to as “renovating the house”. But he does point to the need for more effective remuneration structures, and to distinguish between commission-based selling and commission-based advice. On the debate around competition within the default fund market, he queries how it’s possible to have competition when members aren’t making a choice. “It’s a default system, so it seems to me you can’t have market competition operate because the member’s not making a decision,” he says.

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