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ASIC urged to act on common ownership

Corporate regulator ASIC was slammed for its lack of oversight over common ownership and concentration at a parliamentary committee this morning.

The Standing Committee on Economics, which discussed the implications of capital concentration and common ownership, particularly the role superannuation funds and fund managers play in this area, found that ASIC's role has been minimal.

In discussing the issue of proxy voting and the approaches super funds take, ASIC commissioner Danielle Press said each trustee will have different ways of voting, some will hand it to a proxy adviser or to the investment manager, and some will vote them on their own.

Super funds each have their own policy on how they vote and make decisions based on that, she said. "There is no law, to my understanding, [that] will prevent them to do that."

When voting, Press said trustees must consider their investment policy around voting as well as the financial interests of their members.

Overall, it falls on the circumstances of each trustee and that oversight over how super funds vote ultimately sits in APRA's domain.

"We certainly haven't done an investigation on the proxy advisers policies of the super funds [and] their voting of proxy shares. I do think though each super fund will be very different in the way it does it, and very few actually hand all of their voting powers to a single entity," she said.

MP Andrew Leigh said the Hayne Royal Commission criticised ASIC for being slow to act on emerging issues.

"I worry that on common ownership, [ASIC] is making the same mistake," he said.

"[Common ownership] might be a critical issue when the index funds have 5% each of the stock market, but it could be a very big issue when they've got 10% or 20%."

New research from the Australasian Centre for Corporate Responsibility (ACCR), which analysed the voting records of the nation's 50 largest superannuation funds, found only 22 fund published their voting records.

Industry super funds (59%) led the charge, followed by public sector funds (18%), retail funds (14%) and corporate funds (9%).

Six of the largest super funds - AMP, BT, Colonial First State, Commonwealth Super Corporation, MLC and QSuper - either don't vote, don't disclose their voting records or support far fewer ESG proposals than their peers.

Read more: ASICAPRAAustralasian Centre for Corporate ResponsibilityBTColonial First StateDanielle PressMP Andrew LeighQSuperRoyal Commission