A bill to change the governance requirement of large superannuation funds, which has divided opinion, has passed the House of Representatives.
The Superannuation Legislation Amendment (Trustee Governance) Bill 2015 passed the House yesterday. If it passes the Senate it would require large superannuation funds to have at least one-third independent directors and an independent chair, among other changes.
The Financial System Inquiry had recommended a majority of independent directors for public-offer superannuation funds. However the Government, in its response to the FSI final report, rejected this recommendation.
The bill is supported by the Financial Services Council and the core aspects are supported by ASFA.
The Governance Institute of Australia until recently supported the proposed changes, but has now called for the bill to be scrapped, as the “process has become overly politicised to the detriment of genuine governance outcomes.”
Industry Super Australia has repeatedly called for the bill to be abandoned.
“The Bill radically alters the successful governance of not-for-profit super funds without a shred of evidence of any benefit to members. The Bill does nothing to address the conflicts of interests and poor governance of the bank-owned super sector,” said Industry Super Australia.
A poll, commissioned by Industry Super Australia, has reportedly found that only one in five people support changes to governance arrangements so that industry super fund are “more like the for-profit bank super funds.”
“The Bill dismantles the governance structure of the successful not-for-profit super sector while leaving the scandals and underperformance of the bank-owned sector unaddressed,” said Industry Super Australia Chief Executive, David Whiteley.
“There is no need for a ‘crash or crash through’ approach,” he said.
“Unfortunately the commercial and ideological interests of the banks appear to be a significant factor, with the impact on 5 million Industry SuperFund members a secondary consideration.”
“The most obvious beneficiaries will be the major banks, who have lobbied for these changes for several years and are seeking to increase their market share.
However the bill is supported by a number of professional bodies, including the Australian Institute of Company Directors (AICD).
“The Australian Institute of Company Directors maintains our support for the Government’s legislation to require independence on superannuation fund boards. It will apply internationally accepted standards of governance to funds that have yet to adopt the principle of independence voluntarily,” said AICD CEO, John Brogden.
“The investment returns of a superannuation fund are not a litmus test for effective governance. Good governance instead provides for the long-term stability, sustainability and profitability of an entity.
The Senate is next scheduled to sit on the 9th of November, the same day a Senate committee conducting an inquiry into the bill is due to give its report.
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