AUSTRALIA - The Australian superannuation industry has expressed outrage over an upcoming parliamentary inquiry that will examine the structure and operations of the industry.
The Parliamentary Joint Committee on Corpor-ations and Financial Services will hold hearings that will examine, among other points, if uniform
capital requirements should apply to trustees; if trustees should be required to be public companies; whether promotional advertising should be a cost to a fund and its members; and the meaning of “not for profit” and “all profits go to members.”
The last question in particular is directed toward industry superannuation funds, which are marketed as “not for profit.”
Superannuation industry representatives and opposition politicians say that the inquiry has taken them by surprise as it was announced on 30 June, during the budget season, and because the inquiry’s terms have already been addressed by the regulators governing superannaution funds (ASIC).
“The industry has just gone through a fairly big upheaval, through the licensing of trustee boards,” said Michaela Anderson, director of policy and research at the Association of Superannuation Funds of Australia.
“A lot of the issues – not all – that are raised in the terms of reference have been canvassed in the inquiries that led up to licensing. This new enquiry was consequently somewhat of a surprise.”
The inquiry’s terms would be better answered after the industry has assessed the effects of legislative changes and an intense licensing process. The Australian Prudential Regu-latory Authority (APRA) Registrable Superannuation Entities license came into effect on 1 July.
“We would have thought that in a couple of years time, when the licensing is bedded down and the simplification rules annou-nced in the 2006 Budget are bedded down, then it might be appropriate to see if there’s need for fine tuning,” Anderson added.
The committee’s chair, Senator Grant Chapman, Liberal of South Australia, said the inquiry was designed to assist the government with “future policy directions” and “contemporary findings” would be beneficial.
But Senator Nick Sherry, shadow minister for superannuation, said that Chap-man was a well known critic of industry superannuation funds and that the inquiry was “an attempt to blunt the success of industry funds and the choice of funds environment.”
“The capital adequacy requirements alone would kill member profit funds, reduce competition and eliminate funds that are working well and providing strong competition,” he said.
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