Superannuation fund members are vulnerable, disengaged and disadvantaged by a lack of financial literacy, leaving them "readily able to be taken advantage of".
That's how counsel assisting the banking royal commission, Michael Hodge, QC, summed up the situation in his concluding remarks on Friday following the commission's two-week deep-dive into the superannuation industry.
The royal commission heard evidence of how the big banks and AMP, as well as IOOF, sought every-which-way to keep the fees flowing into their coffers.
We heard of "retail" super funds, those run by the financial institutions, taking fees from their members when no service was provided for those fees.
One super fund, the CBA-owned Colonial First State, even missed the legal deadline for transferring some super fund members' super guarantee payments into low-cost My Super default investment options.
As Hodge foreshadowed at the start of the two-week period, fund members can often do no more than "peer dimly though the darkness" of their super.
That's one of the reasons we have super trustees who are supposed to look after the interests of fund members.
Evidence was heard of how the trustees of the retail super funds had failed to look after the fund members’ interests when the parent institution looked for every possible way that fees could continue to be collected from member accounts.
It's the super fund trustees that are charged under the law with putting the interests of fund members before the interests of others.
Trustees are expected to push back against the desire of the parent institution to maximise profits if it leaves members worse off.
But the conflicts of trustees was best shown in the testimony of Nicole Smith, the former chair of Nulis, the trustee company for NAB's MLC arm.
Hodge directed a series of questions to test the extent to which Nulis was prepared to push back against the demands of those at NAB who wanted to avoid, minimise or delay compensation to fund members who had paid for services not received.
The overall impression to come from the questioning was that the trustees were too often just rubber-stamping letters from those higher up the tree at NAB.
Despite pretence of independence, the trustees of the big retail super funds appear to be beholden to their parent institutions.
Responsibility for policing super fund trustees lies with the Australian Prudential Regulation Authority (APRA).
All four big banks plus AMP have been caught up in the fees-for-no-service scandal. And ASIC has been securing compensation from them for affected fund members.
ASIC’s latest estimate is that nearly $1 billion has been taken from members’ accounts for no service.
It has been slow to act and has not covered itself with glory, but it is APRA that has really come in for a bruising before the commission.
If the trustees had been policed properly, it is likely there would have likely been far fewer poor practices in the first place.
For the past 10 years, there has been only once one disqualification of a super fund trustee by the APRA.
There has not been a single enforceable undertaking against a super trustee. One of the reasons offered for that by APRA deputy chairman Helen Rowell is that enforceable undertakings are made public and there may be a risk of a run on the fund.
But surely, that is overstating any possible reaction. Most fund members are, after all, disengaged with their super. And the matters that are likely to be the subjects of enforceable undertakings are very unlikely to affect the viability of the super funds, and APRA could say as much publicly.
One likely outcome of the royal commission is that APRA will be made more accountable for its actions.
Another possibility is the forced separation of the trustees from the financial institutions that run the funds.
Hodge hinted at this when, in his concluding remarks, his said the commissioner might want to consider whether there were "structures that raise inherent problems for superannuation trustees being able to comply with their fiduciary duties".