Bresnahan says governance has improved quite a lot in this regard, but very serious conflicts of interest continue unabated. He prefers to keep his specific examples of such occurrences to himself, suffice to say that of the six criteria SuperRatings addresses to establish a rating on a super fund, governance is the most contentious. “Out of all the areas we rate, governance would be the most confrontational,” Bresnahan says. “It is constantly the area where we have the most animated discussions.”
Another relationship that may be a conflict of interest is when a director sits on the board of more than one superannuation fund. Bresnehan agrees it’s a concern, but would not downgrade a fund for having a director who sits on another fund’s board. “We’re not rating the individuals,” he says. “The fact an individual may have a perceived conflict of interest is not a huge impact on our rating because that individual could go at any time.” “But it’s a question that needs to be considered. I wouldn’t walk away from it.”
When superannuation minister Senator Nick Sherry was asked at the Conference of Major Superannuation Funds in March this year if multiple directorships were going to be looked at in his self-described ‘focus on governance’, he replied he had never been asked the question before. He has since received at least one letter from a trustee urging him to address this issue, and has yet to respond. Under the choice-of-fund regime, any public offer fund is technically a competitor with any other public offer fund, and the new competitive landscape is starting to leave its mark. When the Australian Institute of Superannuation Trustees held its inaugural conference on super fund governance in May, multiple directorships – while not on the official agenda – got a fair hearing. Peter Hay, director of auditing at KPMG, spoke on conflicts of interest.
He argued that having a trustee on your board who was already trustee of another public offer fund may not be best practice. However, rather than “jumping on it”, he said it would be better not to let the situation reoccur with future appointments of directors. Hesta chief executive Anne-Marie Corboy believed it was not so “black and white” as two public offer super funds automatically being competitors. For example, she did not regard Hesta as a competitor to Cbus, even though they are both public offer funds, because of the different industries they target. But she said Hesta would bar anyone from Health Super’s board from sitting on Hesta’s board, because they are both operating in the health sector.