THE head of the body representing industry super funds has blasted as ”inadequate” the for-profit sector’s proposed independence safeguards.
Industry Super Network chief executive David Whiteley last week wrote to John Brogden, the head of retail fund umbrella group the Financial Services Council, setting out his concerns about the independence of super fund directors.
Under a standard proposed by the FSC, directors of super fund trustees will count as independent if they are also an independent director of the sponsoring financial institution’s board.
By contrast, industry funds are non-profit and controlled by a board of trustees made up of representatives of employers and unions.
The ISN submission to the FSC is the latest in a long-running battle between industry and retail funds for dominance of Australia’s $1.3 trillion superannuation nest egg.
Mr Whiteley told Mr Brogden he did not ”believe the draft standard will have credibility in the broader community”.
”The definition of independent director is novel but fails to address the obvious conflicts of interest and duty a director of the parent company and/or subsidiary would have if appointed to the board of the trustee,” he said.
In its submission, the ISN said the duties a director of a bank or other financial institution owes to that company will conflict with their duties to super funds members.
Mr Whiteley called on Mr Brogden to participate in a broader process that would set a standard binding both sides of the industry.
An FSC spokeswoman could not be reached yesterday, but BusinessDay understands the organisation feels its proposed standard complies with Australian Prudential Regulation Authority and the stock exchange’s independence standards.
The proposed standard would make it impossible for a bank executive to sit on the board of a super fund run by the bank.
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