The Coalition Government has passed legislation through the Senate that acts on two of Commissioner Hayne’s recommendations and will enhance accountability of superannuation funds and strengthen protections for consumers.
In his Final Report, Commissioner Hayne recommended (Recommendation 3.7) that breach of the trustee’s covenants or the director’s covenants or obligations should be enforceable by action for civil penalty.
The Commissioner also recommended (Recommendation 3.6) that trustees be prohibited from “treating” employers in return for “having the recipient nominate the fund as a default fund or having one or more employees of the recipient apply or agree to become members of the fund”.
With the passage of Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017 through the Senate, these two recommendations are on their way to becoming law.
The legislation will also see directors of superannuation funds face criminal penalties for breach of their best interests duty and provide the Australian Prudential Regulation Authority with more powers to deal with underperforming superannuation funds.
The Coalition Government is taking action on all 76 recommendations contained in the Royal Commission’s Final Report and, in a number of important areas, is going further.
In contrast and in their rush to score a political point and look tough in response to the Royal Commission, Labor completely bungled their amendments to this legislation, proposing retrospective penalties on superannuation fund directors back to October 2015. Put forward without consultation, they had the potential to set a very dangerous precedent and resulted in yet another Labor backdown.
The Coalition Government has now passed two of Commissioner Hayne’s recommendations in the Senate before Labor has even provided a response to the Final Report.
Restoring trust in Australia’s financial system is part of the Coalition Government’s plan for a stronger economy.