Super sector falling short

The superannuation industry must do more to improve and uphold governance standards within the sector.

In a speech at a super fund conference earlier this month, Helen Rowell MAICD, a member of the Australia Prudential Regulation Authority (APRA) suggested that while governance within the superannuation industry had improved, more needed to be achieved.

Rowell stated APRA’s aim was to ensure the prudent management of super funds by APRA-regulated trustees.

Discussing conflicts of interest, Rowell said that a third of funds reviewed by APRA were said to have “conflict management frameworks” that were weak or vulnerable. While acknowledging that done correctly, related party arrangements can be beneficial, Rowell warned trustees to ensure:

  • They understood the arrangement.
  • They rigorously checked its appropriateness to member best-interest obligations.
  • They reviewed and monitored the arrangement on an ongoing basis and that the arrangement in fact delivered the member benefits.

Rowell stated clearly that boards needed to provide strong oversight and a “robust challenge” to management.

Independence of view amongst board members was also vital, and APRA’s experience over many years suggests: “having some independent directors…best supports sound governance outcomes”.

Compliance with new remuneration disclosure rules (SRF600.0) has been disappointing with anomalies and errors on fund websites when compared with APRA reporting, Rowell added.