The warnings came after the Investment and Financial Services Association this week revealed that most retail super funds have committed to a new payment system for financial advice regarding super, with commissions now to be phased out.
Jeremy Cooper, deputy chairman of the Australian Securities and Investments Commission, said in a speech yesterday the Super System Review will examine the state of competition in the super industry, and will look at problems surrounding complex disclosure procedures.
Additionally, he warned that percentage-based fees operating as a "wealth tax" will be put under careful review.
''Percentage fees should be looked at very carefully and trustees should be asking why fees structured in this way are appropriate,'' he said. ''These fees operate like a wealth tax; they attach themselves to your super savings."
In the speech to the Association of Superannuation Funds of Australia, he said that the review will be examining the entire superannuation system and that "nothing is sacred, everything is on the table", in regards to fees.
Cooper also said that a body similar to the Australian Shareholders Association may be necessary for the country's 11 million super investors.
He said the review is an attempt to restore confidence in the superannuation system, and that the rate at which people are moving to other investment options reveals that "many Australians do not understand super".
''The review will ask whether these are missing links that make super a bit less competitive, and perhaps a bit less transparent, than it should be.''
Jonathon Bonnett, managing director of De Vryer & Associates, says that reform of percentage-based fees is necessary but the reviews should look at the "key problems" the industry faces.
"They can talk as much as they like about percentage-based fees and other issues, and they are important, but there are other issues. In more than 90% of this industry, advisors are either licensed through or employed by the big institutions. The big institutions are the managers of products - it's pure monopolistic behaviour."
Meanwhile, the IFSA has revealed a number of proposed changes for the superannuation industry in a ‘super charter', including new payment structures, the phasing out of commissions and improved disclosures of fees.
The new charter also proposes increased ‘truth in advertising', claiming that 30-40 year forecasts used in superannuation ads are often ‘misleading'.
While the Federal Government has welcomed the new charter, which is to be phased in over three years for the IFSA's 140 members, it has not made any plans for new legislation based on the proposals.
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