The Coalition Government has tabled an amendment which acts on two recommendations in Commissioner Hayne’s Final Report, enhancing accountability of superannuation funds and strengthening protections for consumers.
In his Final Report, Commissioner Hayne recommended (Recommendation 3.7) that breach of the trustee’s covenants or the director’s covenant or obligations should be enforceable by action for civil penalty.
The Commissioner remarked that the existing “enforcement measures are less direct than they should be, given the central importance of the obligations”.
The Government has already introduced legislation that would see directors subject to civil penalties for breaches of their best interests obligations and now we are immediately acting on Commissioner Hayne’s recommendation that these penalties extend to trustees.
The Commissioner also recommended (Recommendation 3.6) that trustees be prohibited from “treating” employers in return for “having the recipient nominate the fund as a default fund or having one or more employees of the recipient apply or agree to become members of the fund”.
The Commissioner found, “The evidence given in the Commission showed that some large funds spend not insignificant amounts to maintain or establish good relationships with those who will be responsible for nominating the default fund for their employees.”
The Government is also immediately acting on this recommendation, amending the Superannuation Industry Supervision Act 1993 to prohibit trustees from “treating” employers.
The amendment tabled will be made to the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017.
This legislation is currently in the Senate and the Government calls on Bill Shorten and the Labor Party to support the amendment which acts on two of Commissioner Hayne’s recommendations and would immediately enhance accountability of superannuation funds and strengthen protections for consumers.
The Coalition Government has agreed to take action on all 76 recommendations contained in the Royal Commission’s Final Report and, in a number of important areas, is going further.
Restoring trust in Australia’s financial system is part of our plan for a stronger economy.