Ms Bennett and Ms Simmons said that what Hayne considered as “the central issue” was what constitutes a board which is “skilled and efficient in the proper supervision of the funds in the best interest of members”.

As a result, boards should make provision for regular and orderly board renewal and replacement while avoiding “unexpected or wholesale turnover of trustees”.

Ms Bennett and Ms Simmons said “trustee boards should review their policies around director selection having regard to the commissioner’s comment as to the “central issue” and any long director tenures need to be considered carefully”.

They also warned that any decisions or non-actions taken by boards that raise queries around levels of influence provided by a sponsor, shareholder, or third party has on any directors has the potential to be closely examined by the regulators.

Trustee boards should note that APRA may change its prudential standards around governance, the partners cautioned, reflecting a requirement for an improved assessment of board skills, highlighted as a recommendation in a productivity commission report.

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