The interests of unions and employer groups have been put ahead of superannuation fund members with the decision by Senate crossbenchers to oppose legislation that sought to ensure independence on the boards of superannuation funds.

“This decision rejects all tenets of good governance in the modern era. It defies common sense that unions and employer groups would deny their members the benefits of independence on their boards,” said John Brogden, Managing Director & Chief Executive Officer of the Australian Institute of Company Directors.

“Independent directors are widely recognised as a critical element of good corporate governance. The importance of independence is recognised in both the ASX Corporate Governance Council guidelines that apply to listed companies and the standards that the Australian Prudential Regulations Authority imposes on banks and insurers.

“The industry review of governance standards that is now proposed by Industry Super Australia and the Australian Institute of Superannuation Trustees would need to be built on the foundation of internationally-accepted principles of governance, which includes the importance of director independence.

“All parties must understand that current investment returns are not the sole litmus test for effective governance nor is it guaranteed that they will continue if current board structures are maintained.

“Good governance practices, including board independence, instead provide for the long-term stability, sustainability, transparency and profitability of an entity,” Brogden said.

For more information, read the AICD’s submission to Treasury on governance arrangements for APRA regulated superannuation funds.