While Industry Super Australia (ISA) has complained that the Government’s changes to superannuation fund governance unduly targets industry funds, the Australian Prudential Regulation Authority (APRA) has made clear bank executives will be equally impacted in terms of sitting on super fund boards.
The regulator has used a letter sent to superannuation funds in the immediate aftermath of the release of the Government’s exposure draft legislation to declare it intends treating people employed by major financial services conglomerates such as AMP and the Commonwealth Bank in just the same way as union officials and employer representatives for the purposes of determining “independence”.
That is the bottom line of a letter sent by APRA to superannuation funds on Friday where the regulator has added its interpretation to the definitions outlined in the Government’s exposure draft legislation.
The APRA letter makes clear the regulator believes that some independent directors on “entities within a conglomerate group” would be prevented from serving as an independent director on the superannuation fund board – something which would mean that a bank executive might no longer be able to sit on the board of a retail superannuation fund controlled by the bank.
It said the proposed legislative definition (contained in the exposure draft) “prohibits directors who have been an executive officer or director of a body that has had a material relationship with the RSE licensee in the past three years from being an independent director”.
“APRA’s view is that this limb of the proposed definition will result in some independent directors on entities within a conglomerate group being prevented from also serving as an independent director on the RSE licensee board,” the letter said. “This will particularly be the case where a group independent director is director of an entity that has a material relationship with the RSE licensee.”
