Superannuation funds and their executives who are found to have failed in their duties under the Government’s proposed new Financial Accountability Regime (FAR) will not be able to rely on members’ funds to bail them out.
That will be one of the key bottom lines of the Government’ proposed new Financial Accountability Regime (FAR) with exposure draft reveal that superannuation fund licensees will be prohibited form using trust assets to pay a civil penalty arising from breaching an obligation under the FAR.
What is more, it is unclear the degree to which superannuation funds or other financial services businesses will be able to insure against such eventualities.
The maximum penalties under the FAR are significant with the Financial Services Council (FSC) noting that the penalties are to be the greater of:
Responding to a discussion paper on the new FAR, the FSC said that, “interestingly, in the case of RSE [superannuation] licensees, it is noted that RSE licensees will be prohibited from using trust assets to pay a civil penalty arising from breaching an obligation under the FAR”.
It said that provision would be made for the court to have regard to the impact of the penalty on the trustee’s superannuation fund membership.
Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Coalition, which has pledged to reverse any changes if it wins next year’s election.
In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges.
Chant West analysis suggests super could be well placed to deliver a double-digit result by the end of the calendar year.
Specific valuation decisions made by the $88 billion fund at the beginning of the pandemic were “not adequate for the deteriorating market conditions”, according to the prudential regulator.