The compulsory appointment of independent directors to superannuation fund boards is “inevitable within 18 months” believes Deloitte superannuation partner, Russell Mason, who sees it is an opportunity to address lack of diversity.
Mason is urging funds to stop seeing the move as a threat, and instead to embrace it as an opportunity to build their skills.
He commended the quality of many super fund boards, but said they were failing on diversity.
“Its not just defined by gender, but also by diversity of thought, ethnicity, profession, skill set, location and a number of things,” he said. “Boards can now decide to build up their female representation, or if they’re too city centric get someone from regional Australia or if they have members from Queensland but no Queensland representative on the board, amend that.”
The issue is one that draws many opinions and Frank Gullone, the independent chair of Kinetic super, agrees mandatory appointments would happen “any day”, but said boards should focus on a skills build-out first, before questions of independence or diversity.
“Independence gets confused with skills, it should be skills-led appointments. Sometimes they don’t have the required skills. If they do and are independent too, well and good, but the government is pushing towards independents.”
Gullone said diversity should be left to grow organically as the industry matures. The bigger issue, he predicts, will be potential conflicts where independent directors are appointed from within the funds management industry.
“If a director is a fund manager and the fund then appoints that manager the director is conflicted. It’ll come down to the definition of independence.”