The Federal Opposition has signalled it believes that the regulatory framework around superannuation fund mergers is inadequate, and that both members and the regulators should be given a greater say.
The Opposition spokesman for Financial Services, Senator Mathias Cormann (pictured), has told Money Management there do not seem to be any independent checks and balances during fund mergers to ensure they are in the best interests of members.
“The framework within which superannuation fund trustees can make decisions about fund mergers appears to me to be inadequate,” he said.
Cormann pointed out that where superannuation fund mergers were concerned there was no requirement for a majority of members to agree with a fund merger, no requirement for a regulator to consider the issue, and no requirement for a report from an external auditor.
Neither, he said, were there specific requirements with respect to the minimum amount of information that needed to be provided to members about a fund merger – apart from the material change and significant event disclosure requirement.
“There ought to be better regulatory supervision and review of merger arrangements and more adequate remedies for members where a merger ends up disadvantaging them or does not deliver any of the promised advantages,” Cormann said.
He said the current framework relied entirely on the trustees doing the right thing in satisfying their trustee fiduciary duties to act in the best interests of members.
“There don’t seem to be any independent checks and balances along the way to ensure a particular merger is in fact in the fund members’ best interests,” Cormann said.
The Opposition spokesman said that if there were any issues with a merger it was entirely up to individual members to identify the facts and to seek recourse against the trustees of their fund – something that was very difficult to achieve.
“The Government appears to favour fund mergers based on the so-called ‘scale’ argument,” he said. “However, if the fund merger trend is to continue there has to be a better way to ensure any mergers are in fact in members’ best interests.”
Cormann’s comments have come in the wake of the recent announcement that large West Australian-based scheme, Westscheme, will be merging with AustralianSuper and ahead of the expected announcement of a number of smaller fund mergers.
