The Australian Prudential Regulation Authority (APRA) has dismissed industry fund suggestions that independent directors will stand in the way of fund mergers, claiming it is industry funds who have exhibited most merger resistance.
Giving evidence before the Senate Economics Legislation Committee APRA deputy chair, Helen Rowell said the regulator had seen no evidence that independent directors might potentially slow down merger activity with respect to subscale funds.
“We have seen no evidence of that,” she said. “In fact, our experience to date would be that there seems to be more resistance in the industry-fund space around differences of view about composition of board and entitlement to board seats than we have seen in the retail sector with independent directors.”
Asked whether Industry Super Australia was right in suggesting that there had been more mergers in the subscale space between industry funds than there had with respect to retail funds, Rowell said the reality was that there had been a relatively limited number of mergers in any sector the last 10 years.
“We have probably seen a little bit more of consolidation in the retail sector,” she said. “In particular, the structures are quite different. In industry funds, you've typically got single trustee, single fund, whereas in retail you've got a trustee with a number of products where we've seen consolidation of those products, so it's actually difficult to objectively compare the relative merger activity between those two segments because of the different structures.”