As the course of evidence before the Commission shows, trustees have not always ‘managed’ conflicts of interest by giving priority to the duties to, and interests of, beneficiaries over the duties to, and interests of, other persons. Decisions have been made which, at the very least, have tried to accommodate both the interests of members and the interests of entities associated with the entity, that is either the holding company of a group of which the trustee is part, or that can be seen as the ‘sponsor’ of the fund.
This attempt to accommodate the conflicting interests has been achieved in some cases, by entities within the group that have the day‑to‑day administration of the fund controlling the information that goes to the trustee. So, for example, a trustee was asked to approve a proposed program for transferring accrued default amounts to a MySuper product without the trustee having been informed that the administrator had taken the decision only after considering how the proposed program would accord with the interests of aligned advisers. And there were other cases in which the administration entity within a group did not pass information on to the trustee that, on its face, bore upon what decision would be in the best interests of all members.
In still other cases, the trustee company took decisions that not only did not give priority to members’ interests, but sought to accommodate both members’ interests and the interests of others.
Again, particular instances of matters of this kind must be of immediate concern to both APRA as prudential regulator and ASIC as conduct regulator. Again, they are matters that are more likely to be uncovered by APRA in the course of its supervisory work than to be the subject of direct complaint to ASIC. But they are, as I have said, matters that go to the very heart of the trustee’s performance of its central duties.
Both APRA and ASIC should have power to act in respect of matters of these kinds. I would expect that, more often than not, ASIC would be the agency that would take any enforcement action. But APRA must perform its supervisory functions. RSEs cannot and will not meet what APRA has called their ‘financial promises’ without adhering closely to the trustees’ covenants and the sole purpose test.
 AMP case study: vol 2.
 For example, NULIS decided to maintain grandfathered commissions in the context of a successor fund transfer based on a management paper. That paper referred to the possibility of increased costs from member attrition due to adviser dissatisfaction, but did not attempt any estimate of the cost nor consider the amount members would continue to pay. Similarly, a management paper provided to the board of IIML about proposed pricing changes did not contain relevant information, such as IIML’s experience with grandfathering or how many members were paying trail commissions, to allow the board to make an informed decision.