Australian superannuation review calls for “better disclosure” of securities lending

A review of the Australian superannuation system, the Super System Review, has called for “better disclosure” by trustees involved with securities lending.

The review panel, chaired by Jeremy Cooper, former deputy chair of the country’s securities regulator, suggested that there should be no restriction on the practice within the system.

However, “the panel believes that there should be better disclosure to members about the trustee’s policy on stock lending, the risks involved (if any) and the fees it derives from and pays for that practice”, the report read.

“Disclosure should also be made about who retains voting power over the securities.”

In addition to securities lending, the panel opted not to pursue other governance issues, including government-directed investing.

“Governance issues cut right across the review so it's too early for lots of final recommendations on governance,” said Cooper.

“But, to help focus discussion going forward, the panel is starting a conversation about a new member-oriented model for super which aligns more closely with member interests.”

The paper is the first stage of the overall review process of the superannuation system, with the final report set to be delivered to the Australian government by 30^th June 2010.