Government urged to go further than Murray's recommendations on super and ASIC
While Governance Institute supports most of David Murray's Financial System Inquiry (FSI) recommendations, it is urging the government to go further and give members of super funds a voice in the choice of directors.
According to Governance Institute director of policy, Judith Fox, "Good governance in superannuation funds must start with the basic principle that members have a voice. Public company shareholders have long had the ability to vote in directors of their choice and to hold them accountable with their voting power, so there is no reason why fund members should not have the same rights in view of the growing size and importance of the retirement savings industry".
Ms Fox rejects the view expressed by parts of the funds sector that widespread member apathy was a legitimate basis for continuing to suppress member voting rights.
"Under the current regime, fund members may find themselves with a trustee board whose members have significant conflicts of interest, yet with no rights to do anything about it. Governance Institute argues that the right governance outcome is to allow fund members to appoint the directors of the fund, preferably via the process of direct online voting, and to hold those directors accountable by deciding if they are elected or re-elected.
"So while forcing superannuation boards to appoint a majority of independent directors is a good recommendation, it is only part of the overall governance framework that our super funds need. The reforms must go further and give members a voice in determining who should be appointed a director," Ms Fox added.
And while the Governance Institute also supports giving ASIC a three-year funding model to provide it with more autonomy, it is of the very strong view that ASIC's role and responsibilities should be very clearly focused on the oversight of the market and the protection of investors and enforcement. Yet, in recent years, ASIC has taken responsibility for the:
new credit registration and licensing scheme (approximately 26,000 new registrations)
new margin lending licensing scheme
new National Business Names Service (estimated 250,000 to 270,000 new registrations per annum)
new financial product authorisation for Carbon Credits (registering and licensing industry participants to provide financial services in relation to Emission Units)
new Self-Managed Superannuation Funds (SMSF) auditor registration
new Tax Agent Registration Service for financial planners (approximately 18,000 registrations)
new ABN/business names registration service (estimated 300 applications per day)
migration of the register of company charges to the new National Personal Property Securities Register, as well as maintenance of historical charge information on the ASIC register.
"This is a long way from its original role as corporate regulator when first formed in 1998. At the behest of government, ASIC has in recent years become a regulatory conglomerate that covers not only companies, markets and finance industry supervision, but also insurance, superannuation, credit markets, margin lending, business names and securities market disclosures." Ms Fox said.
"ASIC can't be all things to all people. There needs to be a robust discussion to determine and define ASIC's role and responsibilities to ensure its oversight of the market and its resources are focused solely on that role."
Ms Fox confirmed Governance Institute's support for increased penalties saying "This is an excellent recommendation, as it makes it very clear that taking risks that result in white collar crime, on the basis that the benefits outweigh the penalties, will be dealt with severely."
For further information contact Viv Hardy at CallidusPR on (02)9283 4113/ 0411 208 951 or Judith Fox on (02) 9223 5744 or 0408 667 246.
About Governance Institute of Australia
Governance Institute of Australia is the only independent professional association with a sole focus on the practice of governance. We provide the best education and support for practising chartered secretaries, governance advisers and risk managers to drive responsible performance in their organisations.
MR/2014/23
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