AustralianSuper’s recent downgrade by Lonsec for its failure to provide sufficient information on performance and staff turnover reignites the issue of industry transparency.
Superannuation funds, responsible for $3 trillion of other people’s money, shouldn’t still be having such issues especially when it is advocating for a higher SG rate. Transparency, I’m sure we can all agree, goes to the heart of good governance and better outcomes for members.
There are always two sides to every story but for AustralianSuper’s part, it was quick to highlight that Lonsec’s problem was less about performance and more about an absence of information. But what data does the country’s biggest super fund hold that was so proprietary that they couldn’t share?
In this uncertain environment, the ability to compare funds is surely key and rating agencies make up just one part of the puzzle. (Never mind that they too largely rely on the information provided by the funds who in turn pay them for the service.) But how can investors, advisors and members pick the right fund if they don’t feel that they are fully informed?
In fairness to AustralianSuper, it was said to be one of only five of 117 super funds which met the Productivity Commission’s initial requests for information in 2017. And when the resulting government review document had a section about the “yawning gaps in data” you know it is an industry that has significant issues with transparency.
But three years on, what has been done to address the issue? Why has the prudential regulator not taken a harder line on this? Karen Chester was a Commissioner on the Productivity Commission’s Superannuation Inquiry and is now deputy chair and Commissioner at ASIC, what’s her pre-disposition regarding the issue?
As the publisher of Investment Magazine, we have been campaigning for better governance and transparency across the industry. And when reporting on the fallout from the pandemic and the government’s policy response, we have seen clear differences in the way funds have engaged with the press. Some have provided access and industry leadership, while others have been largely missing-in-action, leaving their peers to carry the can.
If you can’t instantly rattle off the names of the CIOs, CEOs and chairs of the largest funds than you probably have your culprits. An interesting twist to the transparency issue has been the rise in engagement of external PR firms, all paid for out of member savings!
Transparency starts with an attitude, to be open and honest, but there is a capability element as well. Superannuation is hugely complex and there is lots of subjectivity, which only reiterates the need for greater disclosures of information and consistency. It is member money after all.
When it comes to transparency, we will see the confluence of attitude and capability. If transparency is an indicator of leadership and governance, then let’s see the industry step up.
Colin Tate is the chief executive of Conexus Financial.