Super investments disclosure benefits not yet proven
The Federal Government has not provided sufficient regulatory or consumer benefits to justify superannuation funds reporting their portfolio holdings and has not made provision for super funds being unable to fully report holdings in private investments according to a leading legal firm.
In a report titled "Reporting Red Tape" which examines the upcoming legal requirements for superannuation funds to disclose portfolio holdings legal firm King & Wood Mallesons stated the provision of disclosed information will make little difference to fund members who are typically lack control over super fund investment decisions and are unable to act on the information.
The report noted that while the explanatory memorandum to the relevant amendment to the Corporations Act to create the disclosure regime stated "portfolio disclosure in Australia is unduly opaque" it did not identify any "specific outcome of the changes nor any real benefit to members".
"This raises a question as to why the Government should impose new and additional regulatory burdens, the costs of which will ultimately be borne by the members who have not demanded the data," the report stated.
"Why impose a burden where the benefits have not been enumerated? Plus, as with all regulatory requirements that result in a practical and administrative burden, investment reporting by superannuation funds comes at a cost. A cost that will ultimately be borne by the members of the superannuation funds."
The report also stated the disclosure requirements, due to start in July 2015, do not take into consideration offshore and private investments where information may not be available due to the underlying nature of the investment or because of confidentiality agreements.
It argued that forcing these investments to provide information may shrink the investment universe available to super funds and funds should only be forced to be disclose information on private investment where it would not act against the best interests of fund members.
AUTHOR
Jason Spits
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