Will Royal Commission impact industry fund boards?

4 November 2015

With the Royal Commission into Trade Union Governance and Corruption still underway, a Government Senator has questioned whether industry superannuation fund boards may need to be reconstituted if a union ultimately ends up being deregistered.

A number of serious allegations have arisen within the Royal Commission impacting the Construction Forestry, Mining, and Energy Union, and evidence has also been heard about members' confidential information being provided to industry fund, Cbus.

The question has also been posed at the same time as the Government is seeking to pursue legislation changing superannuation fund governance arrangements including at least one-third independent directors and an independent chairman — something which has been opposed by a number of industry funds.

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In a question on notice to the Treasurer, Tasmanian Liberal Party Senator, David Bushby has asked whether there might be any implications for superannuation fund boards in the event that a union is deregistered.

"In the event that a union is de-registered and that union has been nominating trustee union representatives to an industry superannuation fund's board, what happens to the board of the relevant superannuation fund," he asked.

Bushby then asked whether, in such circumstances, the union would lose its representatives on the superannuation fund boards and the procedures for finding replacements.

The Liberal Senator also asked whether in the event that an affected superannuation fund became inquorate, the Australian Prudential Regulation Authority had sufficient powers to cover such a situation.

The last significant union to be deregistered in Australia was the Builders Laborers' Federation (BLF) which was deregistered in 1986 before the implementation of the superannuation guarantee.

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Does a representative have to pass a "fit and proper person" test similar to the one required by SMSF trustees?

Perhaps APRA needs to visit it's checklist for Super Fund Directors.

As an example Derrick Balain was a Director of LUCRF super fund. According to the ABC news - "Jewellery, dating site fees among items bought with union credit cards issued to Derrick Belan, royal commission hears". Prudence would mean that APRA should audit any decisions made as a Director of a large Super fund if the allegations at correct.

Great to know Sen. Bushby is concerned about such matters on behalf of all Australians but please, can the faux hand-wringing and concern for process over politics be dispensed with.

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