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Tuesday, 25 March 1997
Page: 2404


Senator SHERRY (Deputy Leader of the Opposition in the Senate)(5.41 p.m.) —I am glad you acknowledged at the commencement of your answer that the RSA product is different from the more traditional products. RSAs were delivered by banks and other institutions, for profit. That is not a dirty word, but that will be their prime motivation. For profit. That is not the case in respect of the traditional industry-type funds—and, I would argue, most in-house employer funds—because of the trustee relationship. Those funds do not have to make a profit. All the money returns to the members because the trustees hold the superannuation money on behalf of employees.

In the case of RSAs, banks and other financial institutions will hold the money in order to make a profit. Trustees, because they have a fiduciary duty to the members of the fund, cannot charge what would be regarded as an unreasonable level of fees and charges. There is no sense to it because they do not make a profit. Whereas RSAs, with their delivery by banks and other financial institutions, will presumably have to make a profit.

Given the other issues we have canvassed, we do not accept that it is a level playing field. Why should we allow a situation to occur where some people will be charged what we regard as unreasonable fees and charges? The banks cannot tell us what the fees and charges will be, and you did not respond to the earlier point about the ISC overseeing the level of fees and charges that will be made through the RSA product.