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Executive directors problematic on retail fund boards
Retail superannuation funds should steer clear of appointing executive directors, according to Superannuation Consumers' Centre (SCC).
The SCC has used its submission to the Financial System Inquiry (FSI) to argue that the inclusion of executive directors is not "consistent with the duty directors owe to members.
"Executives are more likely to be focused on the short term interests of the business rather than the longer-term interests of members," the submission said.
"We also think retail fund boards should include directors with proven expertise in member/consumer issues".
The SCC was established was established by consumer group Choice in 2012 and, elsewhere in its submission, states that it supports reform of super fund governance and support the broad approach in the ASX's Corporate Governance Principles, with the exception of the majority independent director approach.
It said with respect to the composition of superannuation fund boards it supported the one third, one third, one third approach for industry funds recommended by the Cooper Review.
"It is our assessment that the stakeholder model has delivered value for members to date and we are not aware of evidence to the contrary," the submission said.
"By contrast recent research reflecting on the impact of the 2003 ASX rules requiring listed companies to have a majority of independent directors suggests independent directors have tended to lack relevant industry experience and understanding and have driven dramatic pay increases," it said.
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