Speaking at a panel session at the Association of Superannuation Funds of Australia conference in Perth last week, First State Super chief risk officer Suzette Wilson argued for the introduction of a ‘materiality clause’ that would limit the amount of data required to be disclosed.
As it stands, funds will be required to list a holding that consists of just one share in a company.
First State Super would have to disclose 7,074 lines of data on its website, said Ms Wilson – and she is aware of another super fund that will be required to list 36,000 lines.
“Ironically, this is going to MySuper members who are meant to be unengaged – but do they really want to read 36,000 lines of information?” she asked.
The result will be “information overload” for members, she said, “and what it won’t tell the member is the risk of the investment, the investment return or percentage of funds under management it represents”.
In addition, private equity managers often have non-disclosure clauses in their contracts and they have indicated the implementation of the portfolio disclosure rules could deter them from dealing with superannuation funds.
Hedge funds have similar concerns about their intellectual property, Ms Wilson said.
Increased attention from lobby groups with the publication of the data will also increase costs for superannuation funds, she added.
ASIC senior executive leader of investment managers and superannuation Gerard Fitzpatrick, who also spoke at the panel, acknowledged portfolio holdings disclosure “may be an area of interest to government” and will need further regulations to be fully implemented.
While ASIC is “cognisant of the concerns of the industry” on the subject, the regulator is still fully supportive of the measure, he said.
“Systemic transparency is not about forcing trustees to disclose a lot of information at considerable expense on their website for absolutely no reason,” Mr Fitzpatrick said. “It’s all about everyone knowing what’s going on in super – a relatively level playing field access to information for consumers to regulators to analysts and others in the industry.”
The flow of information stemming from the portfolio holdings disclosure will have “positive knock-on effects” throughout the financial system, he added.
Following changes to the Corporations Act 2001 that form part of the Stronger Super legislation, superannuation funds are required to disclose the underlying assets they are invested in twice a year.
Funds must include the information on their websites within 90 days of June 30 and December 31 each year.
The requirement was to have been introduced on 1 July 2013, but has been deferred until 30 June 2014, creating an effective start date of 30 September 2014.
