Will RC theatre be turned into substance?
Royal Commissions inevitably provide theatre, and the current Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has been no exception with some of the industry’s most senior executives finding themselves being grilled by counsel assisting.
But it is to be hoped that the theatre provided by counsel assisting is placed into context when the Royal Commissioner, Kenneth Hayne, delivers his initial findings some time towards the end of September and that some balance is brought to the equation, particularly where the conduct of superannuation funds is concerned.
Counsel assisting the Royal Commission, Michael Hodge QC, spent much of the most recent superannuation-focused hearings belabouring the points made during the Commission’s earlier advice-focused hearings about the lengths to which the banks, AMP and IOOF went to maintain access to grandfathered commissions.
That line of questioning was fair enough in the context of revealing the degree to which superannuation fund trustees within vertically-integrated structures were too often seen to be conflicted in discerning the best interests of members, but it left too little time for the Royal Commission to seriously focus on the appropriateness of matters such as corporate hospitality expenditure by industry fund, Hostplus, or the arguably politically-oriented advertising undertaken by the nation’s largest industry fund, AustralianSuper.
Given that Hayne personally questioned AustralianSuper chief executive, Ian Silk, about the use of members’ funds to finance political advertising it would be surprising if the Commissioner did not encompass this issue in his recommendations. Similarly, he may have been given pause to consider whether members’ funds were being appropriately used in funding a corporate box at the Australian Open tennis.
As much as the major banks and AMP should by now be giving thought to changing the vertically-integrated structures within which they have sought to maintain their superannuation funds, the industry funds should be giving thought to the appropriateness of using their members’ funds to fund political campaigns or corporate boxes at sporting events.
At a broader level, and as previously stated by Money Management, the major banks, AMP and IOOF need to reflect upon how inappropriate and damaging it has been for them to have pursued strategies almost entirely aimed at retaining grandfathered commissions in the face of the obvious intent of the Future of Financial Advice (FoFA) changes.
The Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) might also care to reflect not so much upon what they might now do about matters ventilated by the Royal Commission, but what they might actually have done a lot earlier.
For her part, as the Minister for Revenue and Financial Services, Kelly O’Dwyer, talks up the additional powers and funding she is handing the regulators, she might care to reflect on the evidence given to the Royal Commission that both ASIC and APRA rarely chose to use the powers they already had.
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