ING going into battle on balance

ONLINE bank ING Direct will battle it out on superannuation fees as it seeks to make inroads into the $1.3 trillion industry.

By InvestSMART · 5 Sep 2012

By InvestSMART ·
5 Sep 2012

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ONLINE bank ING Direct will battle it out on superannuation fees as it seeks to make inroads into the $1.3 trillion industry.

The lender says it has found a way to help ease the nation's funding strain as it channels more superannuation savings into the banking system.

ING has launched a basic balanced-style superannuation savings product that it claims has no administration or management fees.

Under the account, about half the funds locked away will be invested into a deposit-style cash account that will be used to fund mortgage lending for ING's banking arm.

"We looked at total funding and a large proportion of those savings were going into superannuation," ING Direct chief executive Vaughn Richtor said.

Over recent weeks, several bank executives have called for a greater slice of the super industry to be used to fund the banking sector. Former Treasury secretary Ken Henry recently criticised the industry for having too much exposure to the sharemarket and said it needed to diversify investments.

Financial Services Minister Bill Shorten said the ING move to remove fees on basic super accounts went to the heart of the government's reforms on financial advice and introduction of MySuper accounts.

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Frequently Asked Questions about this Article…

What is ING Direct’s new basic balanced-style superannuation product?

According to the article, ING Direct has launched a basic balanced-style superannuation savings product designed to make inroads into the $1.3 trillion super industry. The product is positioned as a simple super savings account with a balanced-style approach to investing.

Does ING’s new super account charge administration or management fees?

ING claims the new basic super account has no administration or management fees. The lender is promoting the product as a no-fee super option to compete on superannuation fees.

How will my savings be invested in ING’s super product?

The article says about half of the funds locked away in the account will be invested into a deposit-style cash account. ING intends to use that cash account to help fund mortgage lending for its banking arm. The remainder is part of the balanced-style structure described by ING.

How does ING say this super product will help Australia’s funding strain?

ING argues that by channeling more superannuation savings into the banking system — notably into deposit-style accounts that fund mortgages — the product can help ease the nation’s broader funding strain, the article reports.

How might ING’s no-fee offer affect competition on superannuation fees?

The article suggests ING is ‘going into battle’ on superannuation fees to make inroads in the large $1.3 trillion market. A no-fee product from a high-profile online bank could increase fee competition and pressure some traditional super funds to rethink charges.

What did industry and government figures say about ING’s move into superannuation?

The article notes several reactions: former Treasury secretary Ken Henry warned the industry has too much exposure to the sharemarket and needs diversification; several bank executives have called for more super funds to be used to support banking; and Financial Services Minister Bill Shorten said ING’s move to remove fees on basic super accounts aligns with government reforms on financial advice and the introduction of MySuper accounts.

Who is Vaughn Richtor and what did he say about ING’s super strategy?

Vaughn Richtor is identified in the article as ING Direct’s chief executive. He said ING looked at total funding and noticed a large proportion of savings were going into superannuation, and that the new product is a way to channel some of those savings back into the banking system.

Is ING’s new product connected to the government’s MySuper and financial advice reforms?

Yes. The article reports Financial Services Minister Bill Shorten saying ING’s move to remove fees on basic super accounts goes to the heart of the government’s reforms on financial advice and the introduction of MySuper accounts, suggesting the product aligns with those reform objectives.