ISA quotes new ASIC chair to attack banks, Govt.

Industry Super Australia (ISA) has sought to leverage comments by newly-appointed Australian Securities and Investments Commission (ASIC) chair, James Shipton to aim another attack at the banks and the Government.

ISA public affairs director, Matt Linden said comments by Shipton that the problem with the finance sector was that it had forgotten who owned the money, should prompt the Government to abandon its superannuation fund governance changes.

“Public trust in the finance sector is at an all-time low and this extends to superannuation where bank-owned funds appear to be using compulsory retirement savings to drive parent company profits at the expense of member returns,” he said.

Linden said that it was in these circumstances that he found it extraordinary that the Government’s solution to the disconnect between boards and investors identified by Shipton was to abolish the representative trustee model from the superannuation law and mandate quotas of ‘independent’ directors - typically drawn from the ranks of the finance industry.

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“The reasons for the superior culture and returns of not-for-profit funds lies in the representative trustee model,” he said. “In the not-for-profit governance model, the trustees have a direct link to those who contribute much of super money – employers – and those who own it – employees.”

Linden said that rather than seeking to abolish the representative model from the law, the Government should be in the business of withdrawing its flawed governance legislation.

“If anything, it should introduce laws that require all superannuation funds to appoint representative trustees who know exactly whose money the institution is stewarding,” he said.

Linden said not-for-profit funds which had avoided scandal, on average outperformed bank-owned retail funds for two decades, and invested in Australian nation-building infrastructure projects, and were calling on the parliament to reject the Trustee Governance Bill, re-introduced in September.