Does member interest trump investment expertise?
Investment expertise should be secondary to alignment with members’ interests when appointing directors to superannuation fund boards, according to academic and former senior adviser to the Super System, Dr Wilson Sy.
In a submission to the Productivity Commission (PC) review on Superannuation Efficiency and Competitiveness, Sy accused the Australian Prudential Regulation Authority (APRA) of holding an erroneous view on superannuation governance because the regulator supported proposed Government amendments to require a minimum of one-third independent directors and an independent chair on superannuation boards.
Sy’s submission claimed the proposed legislation “would wrongly prioritise the importance of investment expertise in directors ahead of their alignment of interests with members”.
In doing so, he said the Hayne Royal Commission had recently provided many examples of highly skilled retail fund directors who had unlawfully damaged the interests of superannuation members.
Sy’s submission also stated that, over long periods, retail funds with most “independent” directors had performed significantly worse on a consistent, persistent and predictable basis relative to other superannuation funds which have few, if any, “independent” directors.
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