The full judgement of the court in Financial Services Council Ltd v Industry Super Australia Pty Limited [2014] was released on Friday.
The judgement affirms the decision handed down in the June 6 hearing that the FWC's 'expert panel' is currently "improperly constituted" – largely because FWC president Iain Ross's decision to appoint himself to the panel was "invalid".
However, the judgement makes clear that the court's ultimate conclusion of the panel's invalidity was "not in dispute".
"What there was a debate about, however, was whether the Court should also prevent the Expert Panel from further dealing with the matter at all," said the judgement.
The court did not accept the submission of the FSC "for two reasons": "First, the future circumstances that might arise are not known to this Court and it hesitates to issue an injunction which might embarrass the Commission in the discharge of its functions," said the judgement.
Furthermore, the court "cannot exclude the future possibility" that the Governor-General may appoint a new expert panel member, making the panel valid once more.
"Secondly, the Court otherwise apprehends no meaningful threat. Leaving aside the question of necessity, it is unthinkable that the Expert Panel would proceed to deal with the matter if not properly constituted," the judgement said.
"The President of the Commission [Mr Ross] is a judge of this Court. It is not to be thought that his Honour would, absent some issue of necessity arising, cause an Expert Panel to proceed when this Court had declared it was not properly constituted," it said.
For its part, FSC chief executive John Brogden said the findings of the Federal Court highlight that the selection process for MySuper default funds is "flawed".
“We urge the government to reform the default superannuation selection process as a matter of urgency,” he said.
Mr Brogden said the consequences of not proceeding with reform are "far reaching", pointing to recent research commissioned by the FSC that found the current system will cost consumers and employers as much as $400 million.
Industry Super Australia chief executive David Whiteley said the "obvious solution" to the Federal Court judgement would be to reconstitute the panel – noting that applications for the advertised position on the expert panel closed on Friday 25 July.
"Hopefully the government then selects the panel members and the process can recommence," said Mr Whiteley.
A spokesperson for the Department of Employment said applications for the expert panel position will be assessed by a selection panel consisting of two senior officials from the department.
"A shortlist of suitable applicants will be provided to the Minister [Eric Abetz], who will then seek Cabinet’s endorsement of the final nominee prior to recommending the nomination to the Governor-General in Executive Council. It is anticipated that the appointment will be made as soon as the process allows," said the spokesperson.
