Disclosure changes open door for ‘reckless behaviour’

The Australian Council of Superannuation Investors (ACSI) believes proposed changes to disclosure measures under Schedule 2 of the Treasury Laws Amendment (2021 Measures No.1) Bill are unwarranted.

Speaking at the public hearing of the Senate Estimates, Kate Griffiths, executive manager for public policy and advocacy, and Ed John, executive manager for governance and engagement, said ACSI members invested $200 billion in Australian equities.

The changes proposed under Schedule 2 of the bill related to continuous disclosure obligations and ACSI said it did not see any existing problems with current disclosure measures that would necessitate the changes outlined in Schedule 2.

Griffiths said: “We have had a fair and transparent market under existing laws for many years where companies are incentivised to ensure material information is disclosed in a timely manner. It is not overly burdensome for firm to establish appropriate disclosure systems and there is ample guidance from Australian Securities and Investment Commission [ASIC] and the ASX on how to manage disclosure responsibilities”.

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She described how the proposed changes equated to a “watering down” of the current standards and said ACSI was concerned what would happen to market integrity.

“We are concerned Schedule 2 will undermine the integrity of the market, with a weaker test the level of information disclosed to the market will deteriorate.

“The current measures encourage people to be more transparent than less but when it changes, there is less incentive to come down on the side of disclosing something. That is our concern,” said Griffiths.

“The difficulty with the changes is the potential effect on the integrity and trust in the market. We have had standards for some that time that set a high bar and that facilitate efficient working of the market. In these changes, they call into question the efficiency and trust of the market so I think there are issues.”

John said that the change in standards could be a “green light” for reckless behaviour from businesses superannuation funds could invest in.

“It could give a green light for more reckless practice and have a significant effect on behaviour. [Currently] what is published is true and can be relied upon but if there is less of a feeling that these obligations are as strong as they have been in the past decade then that is a concern.”