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Employees being sued for their advice - Column

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— 1 minute read
I doubt there exists throughout Australia any super fund trustee who has not given serious thought to the hazards and exposures of trusteeship.
I doubt there exists throughout Australia any super fund trustee who has not given serious thought to the hazards and exposures of trusteeship. This is particularly the case since the upgrading of APRA's fit-and-proper requirements as an integral element of the APRA licensing process.

Trustees had noted with concern the decision of APRA, in the now famous case of the Axa Australia Staff Superannuation Plan, to disqualify seven trustee directors of the fund. The disqualifi cation decision refl ected APRA's view that the trustees had not properly informed fund members about a required adjustment to benefi ts. Last week, the Administrative Appeals Tribunal (AAT) set aside APRA's disqualification of the Axa trustees.

The AAT concluded in this case that the trustee's conduct was in the interest of the fund members as a whole. Without going over the various arguments in this high-profi le case, I do urge trustees to note that APRA has signalled it will continue to look very closely at trustee decisions that directly aff ect member benefits, even when the eff ect is benefi cial or minor.

Where they find it warranted, APRA will take the huge step of disqualification. APRA will not appeal the AAT decision about the Axa fund, but trustees should note the warning. The onus on trustees grows ever heavier. As funds increase assets and membership, and as new rules apply, administration of benefi ts becomes ever more complex. The risk of technical error grows. Thus trustees overseeing fund administration, whether the function is outsourced or internal, must give the closest attention both to processes and to the eff ects on member benefi ts. Fiduciary responsibility cannot be outsourced nor delegated to service providers.

Risk management must be more than a set of formulas, it must be embedded in every aspect of the fund. At the AIST we continue to believe that representative trusteeship provides members with the safest and most careful management of their savings. The evidence is on our side. To maintain our high ideals, representative trusteeship requires the support of well-targeted training and education. AIST has upgraded and reviewed all its professional development off erings, as well as our general industry information. We now have a strong presence in Sydney as well as Melbourne and are looking to increase our work in other capitals. With our sister organisation, Conference of Major Superannuation Funds (CMSF), we are planning to improve our financial and other resources so that we can further strengthen the ways in which we support all not-for-profi t trustees and staff .

Expect a big change soon. AIST and CMSF are currently in discussion with membership and stakeholders to seek support for the amalgamation of the two bodies into a new entity. This new body will continue to offer everything AIST and CMSF are noted for, and will offer some relevant new services as well.

Clearly the not-for-profit sector has many challenges ahead, including those implied by the current parliamentary inquiry into everything you have ever thought about super. We expect our plans for consolidation will mean that the notfor- profit part of the superannuation industry will continue its great record of high returns, low costs and effi cient member services. I predict the not-for-profit funds, with their representative trustees and single focus on member benefits, will continue as a dynamic and ever growing presence in the superannuation landscape for as far into the future as we can imagine.

Watch this space.

 

Employees being sued for their advice - Column
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