ADJOURNMENT
Senator SHARMA (New South Wales) (16:05): The average Australian holds around $350,000 in their superannuation accounts by the time they reach retirement age, and that sum will only grow as Australians who've had a longer working life in the super system reach retirement age. This is money that hardworking Australians have set aside to secure their financial future in the expectation that it will provide them with security and dignity in their post-work years.
Because those stakes are so high, it is incredibly important that those entrusted with managing these funds must be held to the highest standards of responsibility, risk management and ethical conduct. That is why I speak tonight about my deep concerns regarding the corporate behaviour of one particular professional superannuation trustee, and that is Diversa.
Diversa act as a trustee for 10 RSEs, or registrable superannuation entities, and they oversee approximately 291,000 member accounts and have over $15 billion in funds management. So their importance to the sector is not just of relevance to their members; it should be of concern to us all in Australia. Diversa, as a professional trustee, gets paid millions of dollars in members fees to do things like perform essential gatekeeping, conduct risk management, do proper due diligence and ensure compliance.
Importantly, they are bound by the law to act in the best financial interests of their members. Yet time and again we have seen Diversa fail in these most basic responsibilities. Australians would know of Diversa from the devastating collapse of the First Guardian Master Fund.
As the trustee responsible, Diversa permitted its members to put roughly $300 million into First Guardian. That fund ultimately collapsed, leaving thousands of everyday Australians facing the total loss, in some instances, of their retirement savings. First Guardian is not an isolated instance of gatekeeper failure in our super system, but Diversa's response in particular stands in stark contrast to those of its industry peers.
When Macquarie Investment Management faced severe trustee failures in relation to the Shield Master Fund collapse, Macquarie took responsibility. They entered an enforceable undertaking with ASIC and paid $321 million out of their own pocket to reimburse impacted members 100c on the dollar. Netwealth was caught up in the First Guardian collapse as well, costing around 1,000 customers some $100 million in savings, and, again, netwealth did the right thing.
They stepped up. They entered an enforceable undertaking with ASIC and agreed to make their members whole. But, whilst others took responsibility, Diversa dove for cover.
Instead of drawing on their own corporate balance sheet to make ruined investors whole, Diversa has gone cap in hand to the government seeking an extraordinary $239 million bailout under part 23 of the Superannuation Industry (Supervision) Act. If Diversa's claim succeeds, every responsible, prudent superannuation fund in Australia and, importantly, their working members will be slapped with a special levy to pay for these failures.
As this has happened and Australians have watched their life savings, in some instances, hang in the balance, how did Diversa's leadership react? Not with humility, not with apology and not with cutting costs. No, in fact, in an astonishing display of arrogance, they awarded their chief executive officer a $777,000 cash bonus—three-quarters of a million dollars.
And this tone-deaf decision has, amongst others, rightly drawn the scrutiny of our financial regulators. We have APRA now conducting a formal investigation into Diversa's executive remuneration frameworks and seeing whether this payout breached their fundamental trustee duties. But we also have ASIC prosecuting Diversa in the Federal Court, alleging severe due-diligence failures, including a failure to enforce its own 50 per cent holding limits on the First Guardian fund.
On top of this, ASIC is also investigating Diversa's fee practices, following alarming allegations of arbitrary fee structures and member overcharging. Meanwhile, APRA has imposed two separate sets of licence conditions on Diversa to address systemic poor risk management, persistent underperformance and high fees. Let's be clear.
Being a superannuation trustee is not an exercise in passive corporate governance, and every individual director on the board of Diversa owes an unyielding and non-delegable fiduciary duty to act independently and strictly in the best financial interests of their members, not their parent entity and not platform partners. Diversa's directors should be held accountable in this place and others for the discharge of those duties.
In particular, attempts by Diversa to frustrate legitimate, good-faith efforts from super funds to extricate themselves from Diversa should be met with swift regulatory action.