The nation’s $2.6 trillion superannuation sector is bracing for two weeks of unprecedented scrutiny, with the Hayne royal commission readying to question fund executives and trustees about their fees, failed mergers, relationships with financial advisers, and whether life insurance is unnecessarily draining member accounts.

Two regulators and 14 funds have been called to the fifth round of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. So far, it is has been a bruising experience for the industry, and this latest round is tipped to be the most explosive.

With the royal commission ready to use its powers, it has demanded super funds explain how they appoint directors, and for the first time reveal fee and cost structures going back five years. The hearings will explore potential over-spending by funds on marketing, and whether funds and trustees have met community expectations.

Issues with supply chains, such as relationships with custodians, insurers and financial advisers, will also be laid bare. As will myriad administrative errors due to legacy systems and whether claims handling in life insurance is up to scratch.

Appearing first is Paul Carter, former executive general manager of wealth products at the National Australia Bank. In the role, which he left in January last year, Carter was responsible for the country’s largest retail superannuation fund – MLC Super Fund.

Later on Monday, Nicole Smith, who resigned in June from her position at NAB’s super trustee company, NULIS Nominees, will appear.

The Australian Securities and Investments Commission, in February last year, imposed a set of conditions on the Australian financial services (AFS) licence of NULIS, following what it termed “breakdowns in internal procedures”.

These breakdowns included inadequate disclosure of insurance changes to members, inadequate training for staff, and insurance policies that weren’t updated.

As a result of these failures, NAB charged 220,000 customers fees of $34.7 million for services they never received, and incorrectly did not pay death and total disability insurance claims totaling $1.6 million.

Last month, NAB apologised to its members and said it would refund those affected a collective $67 million.

The Productivity Commission’s landmark review found 1 in 4 funds persistently underperform, including 12 retail funds and 10 industry funds representing $62 billion in assets and 1.7 million member accounts.

Almost a third of the country’s 30 million superannuation accounts were also found to have “unintended multiple accounts”, the Productivity Commission found, with many gradually being eroded from insurance premiums and administrative fees.

As part of its May budget, the federal government introduced a measure that would make life insurance opt-in for all accounts with balances under $6000. The measures were designed to stop super members from having their balances whittled to nothing due to payment of fees for unnecessary life insurance.

Ahead of Monday’s hearings, 26 organisations have been granted leave to appear before the royal commission, including AMP, ANZ Bank, Australian Prudential Regulation Authority (APRA), ASIC, AustralianSuper, the Commonwealth Bank, NAB, Westpac, IOOF and consumer group Choice

AustralianSuper chief executive Ian Silk is one high-profile industry figure who is readying appear.

Profit-to-member funds including Hostplus, Sunsuper, Cbus’s United Super, Catholic Super, Energy Super and QSuper will also be in the spotlight.

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