The narrowing of the definition of “independent” in the context of directors on superannuation fund boards will serve to narrow the pool of available independent directors, according to industry superannuation fund REST.
In its submission to the Senate Economics Legislation Committee inquiry into the legislation underpinning changes to super fund governance arrangements, REST has sought clarification of the meaning of “independent” especially in the context of employer sponsored directors.
In doing so, the fund said superannuation was a specialised financial product with its own prescriptive legislation and rules and accordingly, directors had to have a higher threshold of knowledge requirements to satisfy the fitness and propriety test.
“As a result, the pool of superannuation trustee directors compared to the pool of non-superannuation fund directors is more limited,” the submission said.
“By having overly prescriptive requirements, this pool is narrowed further, making it difficult for superannuation funds to find appropriate independent directors that meet all of the independence requirements.”
The submission said this would be further complicated by all super funds going through the same process at the same time, competing with each other as well as other non-superannuation funds to achieve their required quotas.
“Flexibility from the regulator relating to timing of the appointment of independent directors to super funds may be necessary as this will be an industry-wide problem” it said. “It should be a period longer than the standard 90 days.”