FSC commends discussion on default superannuation and governance
John Brogden
The government’s move to examine the issue of competition in default superannuation system under modern awards has been commended by the Financial Services Council.
This follows the release of a superannuation discussion paper, Better regulation and governance, enhanced transparency and improved competition in superannuation, by the Assistant Treasurer. The paper outlines proposals for changes to superannuation governance, default fund reforms and MySuper refinements.
The Financial Services Council has consistently advocated for reforms to introduce competition and transparency to allow millions of Australians covered by awards to benefit from lower fees and better services in superannuation. The FSC has also advocated for employers to be free to select an approved MySuper product.
John Brogden, CEO of the FSC said: “Without competition, default superannuation will remain uncompetitive, conflicted and lacking transparency.”
“Superannuation is a financial product and should not be the subject of decisions by Fair Work Australia. This process is inefficient and costly and remains riddled with conflicts,” he said.
“Over two million Australians are not currently benefitting from competition in default superannuation. This has led to limited member services; fee pressures and lack of product innovation.”
The discussion paper also canvasses reforms to superannuation corporate governance arrangements.
“The FSC supports a consistent standard of governance across the industry,” Mr Brogden said.
“Our corporate governance standard is aligned to the ASX corporate governance policy and APRA principles.”
The standard was implemented for FSC members on 1 July 2013 with a one year transition period. It requires superannuation boards to comprise a majority of independent directors and to have an independent chairman. It also prevents directors from sitting on multiple, competing superannuation boards.
Mr Brogden also said: “It is unsustainable to allow conflicts at a board level where funds are clearly in competition with one another. The FSC welcomes discussion on this issue which has been raised in the Assistant Treasurer’s paper.”
