The AICD has lodged a response with the Federal Government over its Exposure Draft of legislation seeking to change the best interest duty for directors and trustees of superannuation funds.
Directors of trustee companies and RSE licensees are already, appropriately, held to a higher legal standard than directors of other organisations. However, the AICD was concerned that the Exposure Draft appeared to work from the premise that, in general, directors are not acting in the best financial interests of beneficiaries. We were concerned that the measures proposed could unreasonably interfere with the reasonable discretion exercised by superannuation funds and their directors. We noted the changes in the Exposure Draft were not recommended by the Financial Services Royal Commission.
For those reasons, the AICD did not support the amendments proposed in the Exposure Draft. The AICD supports strong accountability measures and robustly enforced duties for superannuation trustees. However, taken as a whole, we were not convinced that the proposals achieve the policy intent of increasing the accountability of superannuation trustees in relation to the execution of their fiduciary duties and clarifying the application of the best interests duty.
In particular we:
- did not consider the proposed change to the existing best interests duty necessary. We are also concerned by potential complications that could arise from the proposals as drafted;
- opposed the proposed reversal of the evidentiary burden on trustees and/or directors;
- opposed the proposed power to ban third party payments via regulation.
We encouraged the Government to pursue further consultation with the superannuation sector on the policy objectives outlined, rather than progressing with the proposals presented in the Exposure Draft.
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