APRA urged against right of veto on super fund boards

Mike Taylor

Managing Editor/Publisher, Financial Newswire

17 June 2025

The Australian Prudential Regulation Authority (APRA) should not have a quasi ‘right-of-veto’ on people appointed to the boards of superannuation funds, according to the Association of Superannuation Funds of Australia (ASFA).

In a submission responding to an APRA Governance Discussion Paper, ASFA raised specific concerns about the ability of the regulator to influence who can be appointed to the boards of superannuation funds.

It has sought clarity on how APRA intends to deal with the concept of ‘reputation risk” in assessing the fitness and propriety of people to sit on super fund boards, and wants written confirmation about the regulator’s involvement in meeting with potential appointees prior to their appointment.

ASFA’s response suggests that any such meetings on the part of APRA should “operate only in cases where someone manifestly does not appear to meet the fitness and propriety requirements”.

“Conversely, the approach should not be intended to give the regulator a quasi ‘right of veto’ outside that context,” it said.

“It does not appear reasonable to require regulated entities to notify APRA when concerns arise that may reasonably impact a person’s fitness and propriety, before a determination regarding that person’s appointment to the Board has even been confirmed, especially when the concerns that arise may not ultimately be substantiated,” the ASFA submission said.

It also suggested that a requirement to keep APRA informed of succession plans and nominations prior to appointment or public announcement might prove impractical and unreasonable.

The ASFA submission also questioned whether APRA’s potential approach would affect recruitment timeframes and the attraction of international talent.

“Recruitment speed is needed following an unanticipated vacancy. APRA consultation after a nomination committee recommendation to the board may slow down the process and it is not appropriate to engage APRA on potential appointments prior to the nomination committee’s consideration,” it said.

The submission said it is requested that APRA clarifies:

• the type of situations that APRA expects to be notified of (before an entity has ‘determined’ the issue);
• how confidentiality is maintained for the relevant person to ensure there is adequate natural justice in the situation;
• whether this requirement should be changed to ‘when concerns arise that are likely to materially impact a person’s fitness and propriety, even before a determination has been reached’;
• how APRA expects entities to manage situations in which it notifies APRA of preliminary concerns that ultimately are either not substantiated or do not impact a person’s fitness and propriety in a material way.