The Federal Government should reconsider a proposed penalty regime for the directors of superannuation trustee companies recommended by the Financial System Inquirybecause previous measures to improve the governance of retirement funds are more effective and will not generate an unnecessary regulatory burden.
“Legislation currently before Parliament will considerably improve the governance of superannuation funds by requiring that one-third of directors be independent. This change combined with continuing improvements in fund standards should ensure that funds are run according to internationally-accepted principles of governance,” said John Brogden, Managing Director & Chief Executive Officer of the Australian Institute of Company Directors.
“Our submission to the Financial System Inquiry Final Report indicated that the directors of superannuation trustee companies must already comply with the duties imposed on directors, under the Corporations Act 2001, including directors of banks and other companies. There is no evidence that the avenues of redress already available to fund members if directors breach their duties are in any way deficient,” Mr Brogden said.
He also noted that the flagged consultation to strengthen the enforcement tools of the Australian Securities and Investments Commission should not be undertaken without proper consideration of whether existing regulation is actually deficient.
“Over-regulation impacts negatively not only on organisations but also on the regulators. As such the introduction of any new regulation may initially impede ASIC’s performance, even if it does provide it with new powers,” Mr Brogden said.
“Any deficiencies in ASIC’s effectiveness are more likely to be caused by a lack of adequate funding and resources. The ASIC Capability Review and a proposed user-pays system for its services should be completed, and any findings implemented, as a first step in improving the effectiveness of the regulator.”
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