Mr Wilson wrote a letter to the regulator’s chairman Wayne Byres after a report found leaked research, commissioned by Hostplus, revealed the fund had 70 per cent of its of its infrastructure investments managed by an investment manager it partly owns, IFM Investors.
The Hostplus leak had highlighted a number of issues, the MP said, listing: “a conflict of interest by the fund, a failure to sufficiently spread risk, and secrecy when such problems are identified”.
Mr Wilson, who is also chair of the House of Representatives standing committee on economics, has thus asked that APRA conduct a review into the fund as well as an examination across the industry super fund sector, to ensure there is “proper diversification of risk and that conflicts of interest are managed”.
“Such a review is not without precedent,” Mr Wilson wrote.
“This request sits against a backdrop of trends I am observing across the sector.”
Industry funds, IFM ‘secrecy is disturbing’: Wilson
Mr Wilson said in his work with the standing committee on economics and its inquiry into the big four banks and other major financial institutions, he had seen a number of consistencies across the companies’ answers.
According to the MP, IFM Investors in particular needs “greater scrutiny”, as the organisation has refused to provide evidence for a number of questions the committee asked.
The investment manager had argued it is commercial and the information was in confidence, but Mr Wilson noted other institutions had provided the same evidence in comparable situations.
The standing committee grilled former IFM chief executive Brett Himbury about executive pay in November, asking about severance packages after an executive director was accused of sexually harassing an infrastructure analyst and left the company.
The Superannuation and Financial Services Assistant Minister Jane Hume also more recently blasted IFM for being “notoriously opaque” around remuneration, following reports the investment manager paid out a $12.7 million bonus in addition to a $2.8 million base salary to an unnamed director.
“One of the most glaring trends has been the interconnectedness of industry funds and their investment structures that raises questions about their fulfilment of the sole purpose test (such as allocating significant capital to ME Bank when it has never returned a dividend), conflicts of interest (such as heavy exposure to ISPT and IFM Investors) and low transparency (such as IFM Investors’ failure to answer basic questions on remuneration),” Mr Wilson stated in his letter to Mr Byres.
“…It is my conclusion that IFM Investors seem to believe as they are ‘one-step-removed’ from the funds that receive the compulsory retirement savings of Australians, that they are ‘above’ the scrutiny and transparency justified for oversight of Australia’s retirement savings.
“I do not share this view. Considering the exposure many industry funds have to IFM Investors their secrecy is disturbing.”
He hinted he would suggest to the committee a need to consider its options around the investment manager, in order to complete its inquiry.
APRA is yet to respond to the letter, with a spokesperson telling ifa sister publication Investor Daily on Wednesday it would be replying directly to Mr Wilson.
In 2018, ASIC completed an investigation into retail banking and financial institutions and their conflicts of interest from vertical integrations and over-exposure to risk through related party funds.
The corporate watchdog also looked at conflicts of interest across vertically integrated businesses in the funds management industry in 2016.
AusSuper paid around $500 million to their Trustee for trustee services. Who owns the trustee? The unions. They also paid around $500 million for investment management, a large chunk of which is to IFM. Who owns IFM? Stuffed if I can figure that out but you can bet it’s anything but independent! Run only to profit members eh… If I borrowed my clients’ money to build an investment property I’d go to jail. Yet CBUS can do it and advertise on the cranes in bright neon signs they’re doing this and apparently there are no conflicts and it’s all in their members’ best interest! And aparently it’s cool for ISF’s to pay for corporate boxes their members don’t get to use, and for millions in marketing, also to unions, and still meet sole purpose and member best interest. The system’s a joke!
So, a productivity commission review and a royal commission (focussed on misconduct remember) run by experts and some of the smartest people in the room collectively concluded that industry funds have by and large out governed, performed and delivered over decades, yet produced volumes of actual factual evidence and material on the Broad and multiple governance failures of banks, AMP, retail funds, some insurers generally.
Wilson and the other Lib try hards conspiracy theories are laughable in comparison and are increasingly being seen for what they really are.
No not really, the spotlight is actually firmly on the industry funds at the moment. If they are the smartest people in the room, I assume it has padded walls.
Dont think the RC touched on anything with the Industry Funds. Just a pat on the back. If there is nothing to hide then why put up walls?
Good work Tim, while I do recommend industry funds (and CFS), I make sure they never invest in anything to do with IFM because they are not very transparent. Case in point are the balanced index funds, which aren’t index funds at all.
However, I hope he also goes after AMP, et al with the same vigour given they generally recommend their own investment products.
The more he digs the more murky the water is…. Astounding this was never before the RC and ASIC nor APRA have looked into any of this.
Good work Tim.
We all know – no touch the industry funds – particularly when Liberals were on the back bench -maybe now there is a chance for a level playing field on the elevator adverts – comparing apples to apples instead of oranges maybe!!!
Well done to former IFA editor for exposing this corruption in AFR and current IFA editor for adding to the pressure!
About time!! Tim for PM when Scott steps down!!!
Wilson isnt the biggest idiot in parliament but he’s pushing hard. There’s no way the conservative nutjobs in the Liberal Party would let him be leader, #Smirko wont be the PM when he steps down….
Where is that lefty nutjob Haynes, why isn’t he answerable for the gross negligence displayed of his tenure as RC that supposedly was commissioned to investigate ALL aspects of super, including these issues? And while they’re at it, what about bring ASIC to account, bleeding corrupt ex-lawyer left wing loyalist bunch that they are…
corruption is a little over the top – the agenda was set by political parties and then ASIC. Remember this started as a banking enquiry and broadened into wealth – thank god it didn’t go further outside of dover.