ASIC Chairman David Knott's speech to the AFSA luncheon in Sydney, 25 September 2002.
Front piece
So here I am talking to you about the changing dynamics of the superannuation industry; and about some of the opportunities and risks that I perceive from that change.
Perhaps I should start by emphasising the obvious point that ASIC's emphasis will differ from APRA's. Our mandate is primarily dictated towards issues of disclosure and consumer protection, and it will be in that context that most of my comments are made today. The safety of superannuation and its prudential supervision is APRA's role and I of course defer to APRA's assessments on such matters.
However, I will make a brief comment because we have experienced a handful of fund failures that have occupied both regulators and have attracted a great deal of attention. I want to make the point that from ASIC's perspective some of the alarm about superannuation failure has been disproportionate to the size of the problem. Losses in the superannuation sector as a consequence of fraud or misconduct, while significant for affected individuals, hardly register in comparison to the huge investor losses resulting from the corporate failures now being investigated by ASIC.
Of course we must all remain conscious of the risks and be vigilant to ensure that superannuation policy and its implementation includes adequate investor safeguards.
We also need to recognise that because superannuation is compulsory, it carries a level of political sensitivity which will ensure that all fund failures attract intense scrutiny.
And we must never forget that all failures, whether they be corporate, superannuation or managed investments, have a human dimension which is usually traumatic for the investors and sometimes much worse – causing serious hardship and suffering.
Nevertheless, I think we need to moderate discussion about the incidence of superannuation failure risk and recognise that, with some notable exceptions, the system has stood up well, so far. Considering the massive amount of change that has confronted the industry for more than a decade, its record is good.