Superannuation funds will be required to regularly assess the independence of their trustee directors and chairmen under arrangements likely to be put in place by the Australian Prudential Regulation Authority (APRA) in response to the Government’s exposure draft legislation on fund governance.
The exposure draft legislation, released by Assistant Treasurer, Josh Frydenberg, on Friday was immediately followed by APRA with a letter outlining the regulator’s intentions around the proposed new legislative environment.
That letter, to all registrable superannuation entities (RSEs) makes clear the definitions of independence will be crucial and that not only employer association executives and trade union officials may find themselves on the outer, but also various consultants.
The APRA letter said it proposed to “include material professional advisors, consultants or suppliers as examples of material relationships”.
“Further, as outlined in the explanatory guide to the draft legislation, material relationships are likely to include relationships between the RSE licensee and standard employer sponsors, parent companies and bodies with the right to nominate potential directors,” the letter said.
It then went on to say the independent status of participants would be regularly monitored, stating, “To support this requirement, and because a person’s independence can be affected by the passage of time or changes in their individual circumstances, APRA proposes to require each RSE licensee board to undertake regular assessments of the independence of each director”.
