EDITOR’S LETTER | Our March cover story , “Who speaks for super?”, explores the question of whether some of the more than 30 industry bodies seeking to represent the financial services sector should merge.
There has been much talk in recent years about whether there should be more consolidation of superannuation funds in the market, so it is fitting to question duplication elsewhere in the value chain as well.
One leg to the argument for fewer associations is that the multiple sets of membership fees funds pay are an unnecessary drain on their members’ retirement savings.
Then there are the indirect costs of paying for airfares and hotel rooms to send delegations to numerous conferences and events. Potentially a greater drain is the lost opportunity cost from allocating staff time, out of the office and away from business as usual, to participate in these professional development and networking events.
But perhaps the most compelling argument in favour of the proposition that some of the industry associations should merge is that the plethora of voices is producing a cacophony, and failing to project a clear policy agenda to Canberra.
We heard from politicians, political staffers and former industry association heads alike that the super industry’s habit of sending numerous emissaries, each pushing a factional barrow, to meet with policymakers results in the industry as a whole failing to be heard on critical issues.
Most representative bodies have to keep so many stakeholders happy that they become hamstrung in their ability to say anything meaningful.
So now we have a situation where the largest super funds, despite being paid up members of two or more industry associations, often are also pouring internal resources into producing their own submissions to policy consultations.
The Association of Superannuation Funds of Australia, the Australian Institute of Superannuation Trustees, Industry Super Australia, and the Financial Services Council are the four main bodies aiming to speak on behalf of the industry. It’s pretty clear that if the vested interests of both the unions and the banks were taken out of the equation, there’d be at least two fewer industry associations.
Frankly, I don’t see it happening any time soon. None of the associations has any incentive to consider orchestrating its own demise.
So, it is up to funds to ensure they are satisfied with the value they are delivering to members as a result of maintaining a relationship with each of the different industry bodies they support.
As the Australian Prudential Regulation Authority strengthens its push for funds to show more robust decision-making processes around expenditure, expect to see more scrutiny around the value delivered via industry associations.