Dr Darryl Roberts, General Manager Enforcement at the Australian Prudential Regulation Authority (APRA), today announced the disqualification of Mr Ross James Honeyman and Mr Carl Peter Hanich from acting as responsible officers of a superannuation trustee, investment manager or custodian on the basis of their lack of fitness or propriety under the Superannuation Industry (Supervision) Act 1993.
Both individuals are former directors of the failed trustee company Commercial Nominees of Australia Ltd (CNAL), whose superannuation fund members lost in excess of $30 million.
The decision was in each case based upon the view that, without any finding of dishonesty, they failed to exercise a reasonable degree of care and diligence in ensuring that CNAL carried out its trustee duties.
APRA disqualified three other ex-CNAL directors – Mr Andrew Bryden Skinner, Ms Erica Jane Robinson and Mr Anthony David Hall – in November 2002 and is considering whether other ex-CNAL directors should be disqualified.
The above decisions are subject to appeal. Each disqualified person has 21 days from the date of notice in which to lodge a request for internal review of the decision by APRA. If still dissatisfied with the outcome, they may appeal to the Administrative Appeals Tribunal. Ms Robinson has sought review of the disqualification decision relating to her.
Under provisions in the Superannuation Industry (Supervision) Act 1993, which allow for compensation for losses suffered under certain circumstances, the Commonwealth Government has provided grants of financial assistance to superannuation funds under the trusteeship of CNAL. The amount paid to date is around $25 million. Further compensation claims in relation to CNAL losses are under consideration.
The Superannuation Industry (Supervision) Act 1993 requires trustees, amongst other things, to act honestly and in the best interests of beneficiaries, to exercise care, skill and diligence and to formulate and give effect to an investment strategy for the fund that balances risk and return.
Dr Roberts said that trustees must act in the best interests of superannuation beneficiaries.
"APRA is resolved to see those who fail to exercise due competence, care, diligence and prudence removed from key roles in the industry."
APRA is the prudential regulator of the financial services industry including banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. It currently regulates $1.5 trillion in assets for 20 million Australians.