Assistant Treasurer Josh Frydenberg has introduced the Superannuation Legislation Amendment to Parliament, sparking mixed reactions from the industry.
The Superannuation Legislation Amendment (Trustee Governance) Bill will require all super funds to have a minimum of one-third independent directors and an independent chair.
The Financial Services Council (FSC) has welcomed the bill, arguing the reforms will increase competition and raise standards of governance across the superannuation industry.
FSC chief executive Sally Loane said: “The reforms introduced to Parliament today will require all superannuation funds to appoint independent directors onto the boards of super funds. They will apply equally to all APRA-regulated funds − retail, industry, public sector and corporate − and will increase consumer protections across the industry.
“They are sensible consumer protections which exist throughout corporate Australia, and which are supported by a broad range of consumer groups.
“There is no downside for consumers for their super funds to include a proportion of independent directors with diverse skills on their boards,” Ms Loane said.
The FSC has urged Parliament to proceed with the reforms.
BT Financial Group (BTFG) has also supported the bill, indicating that the reforms will support stronger governance.
BTFG general manager of superannuation, Melinda Howes, said: “Managing and investing Australians super savings is a huge responsibility, one which should come with the highest transparency and disclosure standards for directors.”
Ms Howes said increasing the number of independent trustees and considering professionals with diverse backgrounds for director roles will deliver better outcomes for fund members.
However, The Australian Institute of Superannuation Trustees (AIST) has opposed the bill.
AIST executive manager of governance Eva Scheerlinck said: “There is no evidence that these changes will improve members’ returns.
“Instead they will disrupt the consumer-focused model that has delivered superior performance for not-for-profit funds, year after year.
“Under the proposed definition of independence, most directors would be drawn from organisations and companies within the finance sector that many funds have strong relationships with, or indeed invest in.
“Such directors are more likely to have an interest that is not aligned with members, potentially leading to more conflicts of interests on super fund boards,” Ms Scheerlinck said.
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