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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.

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BFCSA: Alan Kohler warns dangers in $3.5 billion super funds - high fee structure scandalous

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http://www.macrobusiness.com.au/2014/07/kohler-slams-the-super-gravy-train/

July 22, 2014

By Leith van Onselen

Business Spectator’s Alan Kohler has written a stinging critique of Australia’s superannuation system, slamming the high level of fees due in part to compulsory contributions and the lack of price regulation:

A chart in the Financial System Inquiry’s interim report shows that since 2009 the average super fund has increased in size from $1.5 billion to $3.5bn, while the average fee has fallen from 1.3 to 1.2 per cent.  That means the average fees received by each fund have doubled from $20 million a year to $40m.What better business can there be?

Contributions are mandated by law so that about $100bn a year pours in; there are few variable costs (costs are mostly fixed); and there is no regulation of prices, so they are determined by competition alone.  Superannuation is the only utility that you are required by law to buy and whose prices are not set by regulation…You could not invent a better gravy train, so it’s perhaps not surprising that it fails both its customers and the nation.  The chart Kohler has referred to is the following from the draft report of the Murray Inquiry into Australia’s financial system:

Based on the above, Kohler’s criticism of superannuation fees is justified.  If superannuation were a well functioning and competitive market, average fees would have fallen as the value of funds under management has risen, given the funds management is largely a fixed cost business.

 

Yet, despite the huge explosion of superannuation balances since the superannuation guarantee (compulsory super) was introduced in 1993, average fees have barely changed.  This suggests that Australia’s superannuation funds are not just inefficient, but are gouging members – again due in part to our system of compulsory contributions, which has provided the industry with a “sheltered workshop” within which to operate.  When combined with the egregious budgetary cost of superannuation concessions, one wonders why Australia persists with its compulsory superannuation system, which has become the epitome of an entitlement industry.....................

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