Finance Your Super IFM: regulator should value performance when setting governance measures

IFM: regulator should value performance when setting governance measures

APRA should pay more attention to fund performance, says Garry Weaven.
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Regulator APRA should focus more on long term superannuation fund performance when assessing governance practices, according to IFM Investors chair Garry Weaven.

His comments came after APRA deputy chair Helen Rowell wrote to all superannuation funds following the regulator’s review of the industry’s corporate governance.

“The standard of governance is improving, but boards have more work to do,” Mrs Rowell said. APRA recommendations included that funds:

  • consider the optimal composition of their boards in the context of their business and strategic plans;
  • consider the extent to which the use of independent experts signals a skills deficiency on the board;

“Renewal policies and practices of some RSE licensees demonstrated a tension with the spirit and intent of SPS 510, for example by not requiring the board to take into consideration previous terms served on the board when assessing the period of tenure or not enforcing the tenure limits set out in the policy.”

The comments were widely viewed in the media as being a criticism of industry super funds for not appointing enough independent directors and allowing incumbent directors to serve too long.

Mr Weaven said the industry super fund model, which predominantly draws board members from worker and employer representative bodies, has proved its value because it consistently delivered higher returns to members than private sector  competitors.

“The industry fund model has worked well but people keep repeating the issue about more independent directors. It hasn’t been an issue in performance as recent data shows,” Mr Weaven said.

“Meeting the minimum requirements of APRA’s prudential framework is not enough. APRA continues to encourage RSE licensees to change their mindset from one of legal compliance to aiming to deliver the best possible outcomes for their members,” Mrs Rowell said.

*Garry Weaven is chair of The New Daily