Senate backs super reforms
The Senate has backed reforms ensuring superannuation fund boards are made up of one-third independent directors, despite opposition from the Labor Party.
Labor Senators, Sam Dastyari and Peter Whish—Wilson, claimed the Superannuation Legislation Amendment (Trustee Governance) Bill 2015 was "attempting to fix a problem that does not exist", while claiming governance reforms in the financial sector needed to look beyond superannuation.
Senator Whish-Wilson said the Bill failed to address the need to prevent conflicts of interest within the retail sector.
"I would argue that there is a conflict of interest inherent within the whole vertical-integration business model," he said.
"That conflict of interest is much bigger than just governance on superannuation. It is wide. We had the FoFA (Future of Financial Advice) debate in this chamber.
"These conflicts of interest are so obvious. Let me tell you, they are evident in the retail funds that are competing against industry super funds.
"Here we are, having an argument around potential conflicts of interest on industry super fund boards.
"Why are we not having the same discussion about conflicts of interest on retail fund boards? The only conclusion I can draw is that because those retail funds are for-profit funds, somehow that is good."
Senator Whish-Wilson argued that the governance of industry funds did not need to be changed, as they have a good performance history.
However, Liberal Senator, Sean Edwards, said the performance claims required "closer examination", particularly focused on MySuper funds.
"We have to compare like with like," he said.
"If we have a look at the September 2015 data, independent superannuation research and consultancy firm Chant West recently noted:
"‘Industry funds and retail funds performed broadly in line with each other over the September quarter, suffering losses of 1.6 per cent and 1.7 per cent respectively.
"‘While the majority of MySuper products had negative returns in the September quarter, there were 38 lifecycle products that had small positive returns in the September quarter.'
"Of the funds with positive returns, 22 were retail funds, eight public sector. No industry funds had positive returns in the September quarter."
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