AAT criticises APRA over fund findings
The Administrative Appeal Tribunal (AAT) has set aside a decision of the Australian Prudential Regulation Authority (APRA) and strongly criticised the regulator over its handling of the disqualification of a number of trustees of an industry superannuation fund, suggesting APRA should be required to explain such decisions.
The AAT decision, handed down in July 7, appears to have broken new ground in suggesting that the regulator cannot reasonably seek to disqualify some members of a trustee board without disqualifying all members of the board.
The AAT found that while some breaches of the Superannuation Industry (Supervision) Act (SIS Act) had occurred, they were largely unintentional and not serious enough to warrant the disqualifications imposed by APRA.
The decision related to moves by the Timber Industry Superannuation Scheme to change its superannuation administration arrangements in 2000-01 — something which led APRA to disqualify three members of the fund’s trustee board over alleged contraventions of the SIS Act.
In handing down its decision, the Tribunal alluded to the perception of “unfairness” with respect to the behaviour of APRA, stating: “Perhaps the perception of unfairness is unwarranted but, in the absence of any reasons as to why two directors and the CEO should be the subject of disqualification and not the other 10 can only remain a mystery.
“It seems to us that consideration should be given to a requirement that APRA explain why it has taken action against some and not against others,” the AAT decision said. “Only in that way can it been seen that the law has been fairly administered.”
The AAT decision acknowledged that there might have been some sound reasoning with APRA, stating: “We understand that there may be a view that to disqualify the whole Board would have led to (the fund) being placed in an impossible position.
“That may very well have been the case but the choice that was made was to put (the three trustee directors) carrying responsibility for decisions which had been made with collective responsibility by the whole Board.
“All three were left to face the imposition of a penalty by being disqualified. It is a penalty that carries with it professional and social ignominy and, except for those at the very end of their working life, severe restrictions on their abilities to carry on their professional careers or to generate their income as before.
“There are occasions on which one person is singled out from a group of many who all bore responsibility. That may be appropriate when actions are being lauded but it seems entirely inappropriate to make some responsible without explanation of why others are not.
“It brings to mind the scapegoat that is asked to bear grief and sorrow but … without any acknowledgement that there is a burden to which others have contributed and for which they also bear responsibility.”
Recommended for you
A former Victorian financial adviser has been sentenced after stealing $4.4 million from clients, family and friends to feed his “raging gambling addiction”.
Advice licensee Centrepoint Alliance has acquired the financial advice book of superannuation fund Brighter Super and will become the preferred partner to provide advice to its members.
The association has expressed its support for the Opposition’s commitment to making financial advice a “national priority”, alongside its bold target of reaching 30,000 advisers.
Australian investors are increasingly turning to financial advisers as their top source of information, with more than a third using them for investment guidance.
