The Federal Government is facing a rare coalition of forces opposing key elements of its Your Future Your Super legislation, particularly the sections imposing a best financial interest duty on superannuation fund trustees while delivering significant discretionary powers to the minister.
The Government’s draft legislation has brought industry funds, accountants, employer groups, the Law Council and company directors into alignment in pushing back against what is being described as significant legislative and regulatory over-reach.
A webinar conducted by the Australian Institute of Superannuation Trustees (AIST) revealed almost unanimous opposition expressed by the Law Council of Australia, the Australian Industry Group (Ai Group), the Australian Institute of Company Directors (AICD) and the Australian Council of Trade Unions (ACTU) with the accounting group CPA Australia similarly opposed.
At the core of the opposition to the Government’s approach is the suggestion that the draft legislation and the insertion of the word ‘financial’ into best interests effectively reverses legal burden of proof for superannuation fund trustees.
Law Council of Australia representative, Natalie Cambrell said the LCA actually rejected the view that the best interests duty was in need of clearer articulation, particularly by legislation.
“Both the proposal to add the word ‘financial’ to the existing best interests covenant and the proposal to reverse the evidential burden of proof are not warranted,” she said.
Ai Group chief policy officer, Peter Burn said the approach taken in the legislation to protect member interests was poorly conceived and poorly designed.
“It fails to clarify what is meant by acting in members’ best interests (or best financial interest,” he said. “It proposes an illogical and unprecedented power for regulators to prohibit actions that are in members’ best financial best interests.
“…it proposes an overly prescriptive, burdensome and heavy-handed approach that conflicts with good regulatory practice and the Government’s commitment to reducing regulatory burdens.”
ACTU assistant secretary, Scott Connolly said the legislation would create an uneven market for superannuation funds, especially when combined with other aspects such as the exclusion of administration fees from benchmarking.
“The specific and warrantless exclusion of dividend payments to parent companies from being required to comply with the newly worded best financial interest test means this bill is shockingly hypocritical and unfair,” he said.
“This will allow for-profit funds to advertise without obligation, engage in political advocacy or make political donations. The passage of this Bill would create a wholly uneven market for superannuation funds, especially when combined with other aspects of the package, like the exclusion of administration fees from benchmarking.”
The AICD’s Chris Gergin said the organisation did not support the legislative changes because they appeared to work from the premise that, in general, directors were not acting in the best financial interests of beneficiaries – something which was not justified.