Surely it is time for the prudential and competition regulators to step in and put an end to the torrent of misleading information coming out of Industry Super Australia about the performance of bank-owned superannuation funds.
The Australian Prudential Regulation Authority owes it to superannuation fund beneficiaries from both bank-owned and industry funds to ensure that ISA's misinformation campaign is brought to an end. The longer the campaign continues the more it threatens the confidence that people have in the system.
The Australian Competition and Consumer Commission should get involved because it would appear that the information being published by ISA is bordering on false and misleading.
The problem starts with APRA's failure to provide sufficiently accurate data about the performance of super fund products offered by the banks.
It has failed to invest in the technology to ensure it can collect the appropriate data so that meaningful and accurate comparisons can be made.
APRA appears happy to see the average performance of scores of different bank-owned super products used by many different demographic cohorts lumped together and compared with industry products that are totally different because they are skewed towards growth assets.
When a representative of the Productivity Commission was asked about this last month in Senate Estimates, the committee was told not to compare apples with zebras.
ISA relies on the fund level superannuation statistics published each year by APRA to prosecute its claim that bank-owned super funds should be avoided at all costs.
But these numbers are misleading because in the case of the bank-owned funds the performance number is an average of hundreds of different products, ranging from high growth options to low risk retirement products that have low returns.
For example, the $66 billion Colonial First State FirstChoice Super Trust includes 734 investment options. Its average return over the past 10 years was 3.4 per cent.
That average return captures a large proportion of retirees who have moved out of the accumulation phase and moved to less risky product choices which have lower returns.
The bank-owned funds are more conservatively invested, which means that, all else being equal, bank-owned retail funds will have lower returns.
It is grossly misleading to compare that to the average return of an industry fund where 90 per cent or more of the members have the default balanced growth option.
The industry funds have less choice of products because they have failed miserably to win the business of members in the retirement phase.
A new dashboard showing an analysis of the breakdown of where money has flowed in the superannuation system released this week by KPMG shows that the industry funds are not major players in the post-accumulation phase, also known as decumulation.
The bank-owned super funds dominate the post-retirement phase.
It is pretty clear from the KPMG figures that the smart people seeking a choice of suitable retirement-related super products are leaving the industry funds for the bank-owned funds.
The KPMG data, called the Super Insights Dashboard, was the brainchild of former union official and now KPMG partner Paul Howes. He was apparently sick of the misinformation circulating in the market.
The $110 billion AustralianSuper has about 1.2 million members but it only employs about 30 financial planners. All the members of AustralianSuper pay for these planners, but judging from the KPMG fund flows they need a lot more.
The campaign against bank-owned funds included a recent series of political ads warning against changing the governance of industry super funds. These were the so-called fox in the henhouse ads.
APRA's Helen Rowell told a parliamentary committee last week that APRA had written to the funds which fund ISA to ask if the trustees had authorised the ad expenditure in keeping with the sole purpose test in the Superannuation Industry Supervision Act. This test says a fund must be maintained for the provision of benefits to members.
This week ISA stepped up its campaign against bank-owned funds with the release of a report called Options to Lose, which concludes that super funds with fewer options perform better. In other words, steer clear of bank-owned funds.
The report sets a new low for quality of analysis. It highlights that bank-owned funds have many options and it then shows the lower total returns.
ISA then links these two data points to prove that lots of options offered to super fund members generates low performance. This conveniently forgets cause and effect.