THE HON JOSH FRYDENBERG MP
SENATOR THE HON JANE HUME
Minister for Superannuation, Financial Services and the Digital Economy, Minister for Women’s Economic Security
JOINT MEDIA RELEASE
17 December 2021
REFORMS TO BRING GREATER TRANSPARENCY AND ACCOUNTABILITY TO PROXY ADVICE
The Morrison Government is strengthening the transparency and accountability of proxy advice services, and improving the disclosure of superannuation funds’ voting records on company resolutions through the Treasury Laws Amendment (Greater Transparency of Proxy Advice) Regulations 2021.
Australia has a highly concentrated proxy advice market which is dominated by just four firms. Proxy firms exercise significant influence by advising institutional investors on positions to take in respect of resolutions put at company meetings. This includes advising superannuation funds, which collectively own around 20 per cent of the Australian Stock Exchange (ASX) worth around $510 billion.
It is therefore important that proxy advice is transparent, independent and its quality and accuracy can be relied upon by investors and companies alike.
The Government’s reforms improve accountability in the proxy advice sector by extending the Australian Financial Services Licensing regime to cover a greater range of proxy adviser activities, and by requiring proxy advisers to be independent of their institutional clients.
The reforms also ensure greater transparency by requiring proxy advisers to provide a copy of their recommendations to companies on the same day they are provided to investors. In addition, superannuation funds exercising voting rights on behalf of their members will be required to disclose more detailed information on their voting records in a way that is consistent across the industry.
The licensing extension and the requirement to provide copies of proxy advice to companies will commence from 7 February 2022, with the new independence and superannuation voting disclosure requirements commencing 1 July 2022.
Together, the Morrison Government’s reforms will support greater consumer and business confidence in proxy advice services and ensure more consistent regulation across the financial services industry.