The House economics committee will hold a public hearing this week to examine how regulators are responding to recent legislation amendments that aimed to prevent super funds from paying for fines using members’ money.
In recent months, a number of super funds, including Cbus, have sought court approval for plans to build war chests that will allow them to pay for future regulatory penalties and fines, including through the introduction of new fees for members.
“Amendments to Section 56 of the Superannuation Industry (Supervision) Act 1996 were made as part of the government’s response to the Hayne Royal Commission to protect the funds of members by preventing trustees from using these funds to pay for fines incurred by their own actions,” said committee chair Jason Falinski.
“However, there have been wide reports of superannuation funds seeking judicial opinions to contravene this provision.”
The Australian Prudential Regulation Authority (APRA), the Australian Securities and Investments Commission (ASIC) and Treasury have been called to appear before the House economics committee on Thursday.
The hearing will form part of the committee’s ongoing review of the four major banks and other financial institutions.
“The committee deserves an explanation from APRA, ASIC and Treasury as to how they are interpreting these new provisions, and what actions they will take to ensure that the decisions made by Parliament are not easily and carelessly overturned,” said Mr Falinski.
“The committee would like to know how superannuation trustees could fund their penalties, and ways to do so that do not put member’s funds at risk or increase their fees.”
Alongside the regulators and Treasury, the committee will also hear from associate professor Scott Donald from UNSW who has been put forward as a specialist on governance within the superannuation sector.
“Throughout this inquiry, the committee has remained concerned about consumers’ best financial interests,” Mr Falinski said.
“While the regulators will be an important focus of the committee at this hearing, we also look forward to hearing from Professor Donald and his perspective on recent events.”
In November last year, Minister for Superannuation Jane Hume cautioned super funds against “saving their own skins” through the use of members’ money to pay for penalties and fines and hinted that new laws could potentially be introduced.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.