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Superannuation Governance | Due Governance

The super industry is under attack

It's time to rise to the challenge

APRA and ASIC are regulators.  It’s their job to ensure industries under their watch are compliant.  Unfortunately for them the the Royal Commission into banking has shown that there have been significant failures under their watch.    Adding fuel to the fire is a Federal government that wants to see dramatic changes in the way superannuation is managed – and the Productivity Commission was only too happy to oblige in producing some grand ideas and giving APRA and ASIC a kick for being too soft.

“The superannuation industry has missed its earlier opportunity to take a proactive stance to compliance and governance, now its going to suffer from a barrage of pressure to change.  The horse has bolted from skirting some very significant issues” said The Hon. Bernie Ripoll, former Labor Minister for Financial Services and Superannuation.

So what can industry funds do to fight back?

We’ve now moved passed the point of just picking up some of the low hanging fruit.  At the risk of butchering the metaphor, we now need to start climbing a lot higher up the tree.

Their recent review of superfund governance highlights that APRA want to see Trustees providing a genuine review and challenge role.  When APRA Chairman, Wayne Byres had to sing for his supper in May in front of a Senate Committee he noted the Royal Commission has uncovered a lack of accountability for poor outcomes.  It’s a pretty safe bet he is going to be given even more scope to demand accountability from Licensees. 

While many Trustees don’t know where to turn for solutions in this space – there is actually a lot of common ground with other areas of corporate Australia.  Due Governance brings together these elements, that range from corporate governance, regulatory compliance, investment operations, technology, investments and of course a political sensibility, under one roof. 

So how can funds rise to the challenge? 

The process starts with a frank diagnostic to work out what’s working well but also to find out what regulators wont accept.  There’s actually a pretty well-worn path in turning around a regulator’s opinion of a licensee.  At its heart is a visible switch from playing the letter of the law (but skirting some bigger issues) – to a genuine desire to understand what regulators are trying to achieve. 

We strongly believe that you’re better off getting on the front foot and making the changes with an understanding of your own members – this is far superior to the alternative of government’s and regulators choosing what steps you will take.  And for many, that will be their exit from the industry.

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