Industry super funds boss blasts 'inadequate' safeguards

The Industry Super Network chief executive, David Whiteley, wrote last week to the head of retail fund umbrella group the Financial Services Council, John Brogden, setting out his concerns about the independence of super fund directors.

Under an FSC proposal, directors of super fund trustees will count as independent if they are also an independent director of the sponsoring financial institution's board.

Industry funds, which are non-profit, are controlled by a board of trustees made up of representatives of employers and unions.

The submission made by the ISN to the FSC represents the latest in a long-running battle between industry and retail funds for dominance of Australia's $1.3 trillion superannuation nest egg.

Mr Whiteley told Mr Brogden he did not "believe the draft standard will have credibility in the broader community. The definition of independent director is novel but fails to address the obvious conflicts of interest and duty a director of the parent company and/or subsidiary would have if appointed to the board of the trustee."

In its submission, the ISN says the duties that a director of a bank or other financial institution owes to that company will inevitably conflict with their duties to the members of the super funds.

Mr Whiteley called on Mr Brogden to participate in a broader process that would set a standard binding both halves of the superannuation industry.

An FSC spokeswoman could not be reached yesterday, but BusinessDay understands the organisation feels its proposed standard complies with the Australian Prudential Regulation Authority and the stock exchange's independence standards.

The proposed standard would make it impossible for a bank executive to sit on the boards of a super fund run by the bank.