The Financial Services Council (FSC) has moved to enforce mandatory transparency and governance in superannuation with the release of a new standard on superannuation fund guidance.
Under the new policy, the FSC will require the 16 retail and corporate superannuation member companies within its membership to meet standards of transparency and governance in the way they operate their respective superannuation funds.
The policy specifically focuses on the independence of superannuation chairpeople and directors, the disclosure of remuneration, conflicts of interest, environmental, social and corporate governance, and proxy voting.
FSC chief executive John Brogden said the decision to lift the standards followed the Australian Prudential Regulation Authority's (APRA) push to align corporate governance standards in super with those of banking, life insurance and general insurance.
"APRA is moving forward with some new standards next year. We want to go above and beyond the standards, and frankly the basis for this is that superannuation funds should meet the same standards that they expect of the companies in which they invest," Brogden told InvestorDaily.
"So many superannuation funds would refuse to invest in a company where they don't know how much the directors are paid, where there is conflicted relationships of directors, where they are on multiple boards of competing organisations that refuse to invest in those organisations, and that's a standard that should be expected of superannuation funds.
"When you're talking about compulsory savings required by law, frankly you do need to go the next step."
Asked what feedback the FSC had received from the 16 members, Brogden said the response had been positive.
"Our members engaged in this debate internally so they are very supportive of this and in most cases they either meet or come close to meeting these standards anyway," he said.
"For many of our members they are already there, and in other cases they don't have far to go to be there."
The challenge now lay with the industry superannuation funds, with the majority of them not declaring remuneration, he said.
"In this day and age it's outrageous that a member-owned organisation, let alone a shareholder organisation, doesn't tell its shareholders or members how much their directors get paid. That's 1980s stuff," he said.
"I think having established this standard, there is frankly no argument from the industry at large against adopting these standards, particularly areas of disclosing remuneration and ending any conflict of interest in any related-party transactions."
As with all FSC policies, members will have to provide evidence on an annual basis that they complied with all standards. Penalties would apply if standards were not met, Brogden said.
The new measures are expected to commence on 1 July 2013, the same timeframe as MySuper and APRA's new prudential standards for superannuation funds.
A spokesperson for AMP Financial Services, one of the 16 superannuation member companies, said as superannuation was the largest asset most Australians would hold outside their family home, it was appropriate all super funds had strong and transparent governance.
"This means ensuring measures are in place to make sure the people managing a member's money have the right qualifications, understand the responsibilities of their role and put the interests of the fund members first," the spokesperson said.
An IOOF spokesperson said the company expected to be compliant by the FSC's deadline.
"As a listed entity, IOOF already complies with the majority of these new rules, so we will certainly be compliant by 1 July 2013," the spokesperson said.
An ANZ Wealth spokesperson said as a member of the FSC, the wealth division of ANZ was bound by the council's standards.
"We are already in compliance with some aspects of the FSC's proposed superannuation governance standards and will work towards full implementation by 1 July 2013," the spokesperson said.
A Colonial First State (CFS) spokesperson said CFS would continue to work with APRA and now the FSC on maintaining appropriate governance structures for its trustee boards.
"We welcome the FSC's latest initiative in this regard and look forward to working with them on its formulation," the spokesperson said.
