The Fair Work Commission (FWC) has said it will halt its selection of MySuper funds as default funds under modern awards, after the full Federal Court found the expert panel was incorrectly constituted.
In a statement released yesterday the president of the FWC, Justice Iain Ross said that the default fund selection process was formally on hold.
"In consequence of the Order of the Federal Court, the Expert Panel as currently purportedly reconstituted will not deal further with the matter," Ross said in the FWC statement.
This comes after last week's hearing over the composition of the FWC superannuation Expert Panel, the judges made two orders: first, that Justice Iain Ross's appointment of himself to the panel was invalid, and that the panel is currently incorrectly constituted according to the Fair Work Act.
Both the Financial Services Council (FSC) and Industry Super Australia (ISA) have claimed a victory in the Federal Court, even though the court's orders essentially uphold the FSC's objections.
The reconstitution of the Expert Panel is now in the hands of Employment Minister Eric Abetz. In a statement, his office said: "The Federal Court decision has confirmed that the default superannuation review process cannot continue without a new appointment to the expert panel being made by the Government. However, the process of identifying and appointing a suitable person is likely to take some time.
"The Government will now consider what options may exist to clean up this mess that has been left to it by Bill Shorten."
Despite the fact that the FSC's objections were upheld, ISA argued that the result was a victory because the hearing did not result in the removal of superannuation from modern awards. In its statement ISA did not make reference to the two orders.
While the hearing was never likely to result in the removal of super from awards, the FSC has stated that its main goal is to end the FWC's involvement in default superannuation.
Following Friday's hearing, FSC chief executive John Brogden said the court had upheld his organisation's position, adding: "We want an open, competitive process which allows every APRA-approved MySuper product to compete for default superannuation contributions.
"A genuinely competitive market will lead to more transparency, lower fees and better services for employers and employees," he said.
However, ISA deputy chief executive Robbie Campo called on the FSC to support the FWC process.
"The bank owned super funds oppose the process recommended by the Productivity Commission to ensure that default funds served the best interests of its members."
"Instead the bank owned super funds want a free for all which would allow default products to be sold on the basis of sales commissions and other incentives."
The government is currently considering whether to remove super from awards altogether. The Federal Court's orders will not help the industry fund sector's case for maintaining the status quo.