Equity Trustees has defended the role of independent trustees and superannuation platforms, arguing the sector is already delivering strong member outcomes and does not require additional regulation.
In a submission to Treasury’s consultation on enhancing member protections in the superannuation system, the trustee company said the platform market had been the most responsive segment of the superannuation industry in providing services to members and helping them meet their personal objectives.
The submission said platform products, alongside the self-managed super fund sector, which holds around $1.8 trillion in funds under management, offer services that are most closely aligned with the Retirement Income Covenant and are best positioned to help members achieve individual retirement objectives.
Equity Trustees also argued that APRA’s recent licence conditions imposed on platform trustees would result in a narrowing of investment choice and that the regulator’s actions were sufficient to address governance concerns in the sector.
“Equity Trustees contends that this APRA initiative alone is sufficient to ensure the continued efficient, fair and honest functioning of the superannuation platform market and that further regulatory changes are not required – the market is already the most fit for purpose superannuation market segment.”
The trustee company warned against attempts to draw strict legislative distinctions between platforms and platform trustees, arguing the boundaries between different superannuation products and structures are becoming increasingly blurred as funds expand their offerings to meet evolving retirement income needs.
The submission said features such as advice, investment choice, tax arrangements and fund structures increasingly overlap across the superannuation system.
A key focus of the submission was the defence of the professional independent trustee model, which Equity Trustees said oversees the interests of around 990,000 members and has grown from approximately $10 billion to $150 billion in assets over the past decade.
“The professional independent trustee model has been the fastest growing segment of the superannuation market in the last ten years and has been responsible for material innovation in the industry,” it says in the submission.
“The model has a solid record of delivering to members and has not suffered from the high profile systemic failures that have been prevalent in the vertically integrated in-house models – both commercial models and Not-For-Profit models.”
The comments come as Treasury considers a range of reforms aimed at strengthening governance and member protections across the superannuation system following several high-profile fund collapses and regulatory reviews.
While defending the independent trustee model, Equity Trustees said it strongly supported proposed reforms to managed investment schemes and responsible entities, as well as stronger regulation of lead generators.
The company argued that the failures of Shield Master Fund and First Guardian Master Fund highlighted shortcomings among responsible entities rather than trustee structures.
“The misuse of scheme assets for purposes other than investment as disclosed to investors – as the liquidators’ reports have revealed – is clearly fraud or theft causing loss to the superannuation funds and their members.”
“We welcome the reform of MISs and their REs that was the subject of Treasury’s first consultation and ASIC’s consultation in respect of the Net Tangible Asset capital requirements for REs.”
The submission adds to an increasingly active debate over the future shape of superannuation regulation, with industry participants weighing the balance between member protection, investment choice and innovation as policymakers consider changes affecting platforms, managed investment schemes and governance frameworks.
