POWERED BY MOMENTUM MEDIA
APRA challenges union/employer board nominations
The Australian Prudential Regulation Authority (APRA) has sent a clear signal to superannuation funds that it is unhappy with director selection processes which preclude the ability of boards to reject directors who they believe are not appropriately qualified for the job.
In doing so, the regulator has directly referenced the appointment of directors to industry funds and the involvement of nominating bodies such as unions and employer groups whose nominations cannot be vetoed.
APRA deputy chair, Helen Rowell has used an address to the Australian Institute of Superannuation Trustees (AIST) to make clear the regulator’s concerns about such arrangements and to urge superannuation funds to consider changes in the context of adopting new governance arrangements.
Reinforcing APRA’s view on the desirability of superannuation boards having at least one-third independent directors, Rowell said her view had not changed since 2015 in the context of independent directors broadening the skills and capabilities and improving decision-making/.
“They [independent directors] are also well-placed to hold other directors accountable, particularly in relation to conflicts of interest,” she said. “This is as relevant for directors of industry and other not-for profit funds that may face potential conflicts with the interests of their stakeholders (such as nominating organisations), as it is for directors of retail funds.”
Discussing what APRA believed better superannuation fund governance looked like, Rowell nominated a clearly articulated view of the optimal board composition (in terms of size, skill mix, and relevant diversity considerations) including independent directors.
She then also nominated: “a director selection process that provides a clear role for the board (and not just nominating bodies) in the appointment of candidates, with a view to ensuring that candidates bring the skills and capabilities needed to oversight execution of the trustee’s strategy and its ongoing business operations and are a ‘good fit’”.
Recommended for you
Super funds had a “tremendous month” in November, according to new data.
Australia faces a decade of deficits, with the sum of deficits over the next four years expected to overshoot forecasts by $21.8 billion.
APRA has raised an alarm about gaps in how superannuation trustees are managing the risks associated with unlisted assets, after releasing the findings of its latest review.
Compared to how funds were allocated to March this year, industry super funds have slightly decreased their allocation to infrastructure in the six months to September – dropping from 11 per cent to 10.6 per cent, according to the latest APRA data.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
31.73 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
30.15 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
26.71 3 y p.a(%)
