FED:Shorten accused of favouring unions

AAP General News (Australia)
04-28-2011
FED:Shorten accused of favouring unions

CANBERRA, April 28 AAP - The coalition has accused Assistant Treasurer Bill Shorten
of pandering to the union movement with his proposals to reform the $1.3 trillion superannuation
industry.

The former union leader has unveiled a plan requiring investors to renew their relationship
with a financial planner every two years.

Industry Super Network, the lobby group for union and industry super funds, had wanted
an annual opt-in period.

The Financial Services Council, which represents retail super funds and larger wealth
funds, was pushing for a three-year gap between contracts.

Still, the coalition's assistant treasury spokesman Mathias Cormann said Mr Shorten
was favouring industry super funds.

"Obviously, the minister is very close to players in that part of the industry," Senator
Cormann told AAP on Thursday.

"It's important for the minister to act in the public interest and not the vested interests
of his union friends."

Mr Shorten said reforming the financial advice sector would restore trust in the system,
following the collapse of Storm, Trio and Westpoint.

But Senator Cormann described this claim as ridiculous.

"For him to claim this will prevent future collapses like Trio, Westpoint and Storm
is disingenuous," he said.

"The issue was inadequate regulatory oversight."

The coalition says it will vote against any proposal forcing consumers to opt-in with
an adviser over any set time, arguing it would be unnecessarily bureaucratic, and cause
smaller financial advisers to pass on higher costs to their clients.

He cited Treasury evidence showing Labor's "opt-in" proposal would add $50,000 in extra
cost to a small financial advice group.

The coalition supports Labor's plan to ban upfront commissions from July 2013.

But it opposes a plan to stop commissions for risk insurance inside super.

Senator Cormann said the UK had recently reversed this kind of policy, arguing this
kind of ban would discourage people from taking out protection against income loss.

The coalition has reserved its judgement on Labor's plan to have a broad ban on volume payments.

In the super sector, super fund managers pay rebates to super funds for investing their
clients' money, with lower fees paid if more funds are invested in a larger pool.

The Financial Services Union welcomed the ban on volume-based commissions or sales
target payments.

The union's national secretary Leon Carter said the government was signalling the death
knell for conflicted remuneration in the finance industry.

Mr Shorten's predecessor Chris Bowen unveiled proposals to reform financial advice
in April 2010, following a parliamentary inquiry into the collapse of Queensland-based
Storm Financial.

The government is yet to translate Mr Shorten's proposals into draft laws.

AAP saj/sb/nb

KEYWORD: SUPER 2ND UPDATE

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