Radio Brisvaani
The big insurance and wealth manager Suncorp has been forced to remove advertised claims it offered “low-fee” superannuation, after being confronted with evidence from the bank royal commission.
Suncorp also admitted the fees paid by its superannuation members are not included in its product disclosure statement (PDS).
The fee structure is instead buried in a 59-page Suncorp Everyday Super Guide, which doesn’t specify the amount of the fee either.
Instead it declares Suncorp holds right to hold any tax surplus accrued from investments and pay it to a related entity to cover administration fees.
In other words, surplus tax from investments — which generally amounts to millions each year — is not returned to members, but retained by Suncorp.
“While the amount and percentage are not disclosed, Suncorp tells members that funds in the tax surplus may be used to pay for Suncorp Portfolio Services,” Suncorp Superannuation executive trustee Maurizio Pinto told the commission.
Counsel assisting Michael Hodge, QC, asked Mr Pinto whether Suncorp Super members would be aware of the fees they pay.
Mr Pinto: “Not based on that disclosure.”
Mr Hodge: “Based on any disclosure?”
Mr Pinto: ” Not that I can think of, no.”
When the retained tax surplus is added to another administration fee levied by Suncorp’s Life and Superannuation business, the total administration fee for 2016 was 1.05 per cent.
It was 1.27 per cent two years before.
“It seems rather high,” Mr Hodge said.
Mr Pinto said Suncorp had removed the claim that fees were low from its website.
“It was done to align the wording on the PDS with the website, that is the fees are competitive,” he said.
Mr Hodge suggested there was an overlap in the fees, given the amount collected for administration plus the tax surplus, was less than amount spent.
In looking at the rather convoluted funding structure, Mr Hodge said the highest cost incurred was calculating the super fund’s unit price, which works out at around $2.7 million a year.
Mr Hodge: “It would seem on its face like Suncorp Life is recovering the cost of calculating the unit price out of the units. That’s how the investment policy says it works. And then Suncorp Life is being paid a proportion of the admin fees that are charged to members. And then Suncorp Life is receiving the tax surplus justified on the basis that it’s incurred a cost of about $2.7 million for calculating the unit price.”
Mr Pinto: “Yes.”
However, Mr Pinto said while he was not privy to exactly how the fees were calculated, he didn’t think the fees overlapped.
It was an observation that brought a sharp rebuke from Commissioner Kenneth Hayne.
Mr Hayne: “The difficulty is, if you’re not certain of it, how can you be certain that the member is not paying twice?”
Mr Pinto: “I don’t know.”
Source: http://www.abc.net.au/news/2018-08-14/suncorp-fronts-banks-royal-commission/10115518
