Senator Jane Hume has slammed the superannuation industry over the excuses used by super funds for not merging, saying there is simply no excuse when members' best interests are at play.
Speaking on the final day of the ASFA Conference in Melbourne this morning, the Assistant Minister for Financial Services, Superannuation and Financial Technology Senator Jane Hume slammed laggard super funds who offer a myriad of excuses for not merging, even when it might be in the best interests of members.
Following APRA deputy chair Helen Rowell onto the stage, Hume said the regulator's freshly revealed heat map would force trustee directors to "look each other squarely in the eye and ask 'is our current business model really delivering the best outcomes for members?'"
"And if their fund is not delivering the best outcomes for members, or if it stands at increasing risk of not doing so, then it begs the question: should that fund merge?" Hume asked.
But the Senator said a long tail of underperforming funds - many of which are sub-scale - still remain in the industry, and called on the trustees of such funds to consider "dispassionately" what the right thing to do is.
"This reality will come as no surprise to anyone in this room," Hume said.
"The writing has been on the wall for a considerable period of time, and there has been endless industry chatter about mergers for many years. But despite this, there has in fact been relatively little action, particularly at that smaller end of the super spectrum."
The Senator said her discussions with industry participants had led her to understand there were several myths floating around the system about the barriers to fund mergers.
These include funds being unwilling to absorb the tainted assets of another, union and employer groups halting mergers until they receive compensation, arguments over board composition and directors fearing for their own jobs.
Hume went on to bust those myths, before slamming the industry for its rationalisation of failures.
"It's not the legislative framework, it's not the tainted assets, it's not tax, it's not the regulator, it legally can't be the shareholder that is the obstacle, and ethically, it can't be the trustee directors," Hume said.
"Which makes the lack of action by trustees something of a mystery."
Hume said that between legislated changes and facilitation by regulators, the government had done its part in "greasing the skids for mergers", and said it was time for trustees to step up.
"APRA is always open to assisting trustees in working through potential barriers they face when trying to merge," Hume said.
"APRA can provide trustees with insights into how practical aspects of a merger may be achieved in cost effective manner. Now it's over to industry, to do your part."
While addressing the media following her speech, Hume said there "really isn't any excuse" for funds not to merge.
"There should be nothing standing in the way of those smaller funds from finding a suitable partner, a marriage match. There all out there, they're there just waiting for it to happen and I think APRA are going to help nudge that process along now," Hume said.
Asked if it were disappointing that large, high-performing funds were pairing off with one another instead of seeking to absorb smaller players, the Senator said it was a natural evolution of the industry.
"As I said, there are great advantages from the economies of scale that you can see from these fund mergers. Certainly there's a sort of technological imperative to doing so, as well as a cost and investment imperative too," Hume said.
"We would like to see those smaller funds merge. They've just got to find the right partners, but they're out there."