Financial Standard Comments - MySuper Bill could expose individual trustees to legal action

Comment by Bradley Smith (Build a Brilliant Business)

Bradley Smith (Build a Brilliant Business) — Mon, 13 Aug 2012 13:15:58 +1000

Aren't these the same people who want further regulation, legal responsibilities and liabilities placed onto SMSF Trustees? Yet when faced with having responsibilities of their own - they want to run a mile. If they want to be in charge of the superannuation funds of their members, isn't this responsibility only fair. That is why a lot of people decide to have there own SMSF because they are prepared and want to be responsible for their investment decisions rather than have faceless trustees who are prepared to take risks with someone else's money - and not be responsible for the risks that they take. Perhaps the unintended consequences of this legislation were not so unintended.

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Comment by Jonathan Steffanoni (QMV Solutions)

Jonathan Steffanoni (QMV Solutions) — Mon, 13 Aug 2012 14:44:00 +1000

As a general proposition, superannuation trustees need to be accountable through the chance of litigation should they fail in their fiduciary duties owed to their beneficiaries (or members). The purpose of a fiduciary relationship is to protect the interests of the beneficiaries.

In order to maintain an action in breach of trust in the context of failing to retain the value of trust assets, the beneficiaries must prove that the trustees made decisions regarding investments which would not have been made by an ordinary, prudent business person, and that a quantifiable loss to the trust estate has resulted. (See Nestle v National Westminster Bank Plc [1994] 1 All ER 118). I contend that trustees generally do make investment decisions in an acceptable way, but that if a trustee does breach trust in such a manner, that they should be held accountable.

Secondly, it is a principle of good corporate governance that directors are legally and personally accountable for their decisions where negligent or intentionally malicious.

I agree that the changes do increase the risk of litigation, and that might well be a good thing for both beneficiaries and trustees alike. It should keep trustees active and engaged in ensuring the interests of beneficiaries. MySuper is aimed at protecting the rights of those members most reliant on trustees, so it's fitting that they should have a strict level of accountability.

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Comment by Fiona Reynolds (AIST)

Fiona Reynolds (AIST) — Tue, 14 Aug 2012 13:05:00 +1000

We are not arguing that trustees should not be accountable, and we support the highest standards being applied to trustee directors, we just want some amendments to the wording - a very normal process when dealing with legislation.

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