Former FSA boss picked to police Australia’s superannuation industry

Australia has appointed a former British regulator known for her tough approach to policing the City of London as the new head of its superannuation watchdog at a key moment for the A$3tn sector.

Margaret Cole was previously the interim chief executive of the UK’s then Financial Services Authority. According to people familiar with the situation, she will join the Australian Prudential Regulation Authority to lead its scrutiny of the country’s so-called super funds, which provide for its residents in retirement.

The superannuation industry is overseen by Apra, which will continue to be led by Wayne Byres. Cole’s appointment to Apra’s board comes in the wake of a series of financial scandals that has also led to criticism of Australia’s watchdogs.

The hire also comes as prime minister Scott Morrison’s government attempts to push through a major overhaul of the country’s 30-year old superannuation system, a move which will increase the role of the industry’s watchdog in overseeing the sector.

Controversial proposals unveiled last year will see super funds held to greater account for investment underperformance and for fees levied on savers’ retirement funds. Funds that fail annual performance tests could be barred from taking on new members.

Cole has experience in senior roles at a regulator under attack: she led the UK’s now-defunct FSA as it was being split into two organisations in the wake of the financial crisis. When it became clear she would not get the top job at the new Financial Conduct Authority, she left to become general counsel of PwC in the UK, moving to Australia to work for the Big Four professional services firm last July.

Cole had shaken up how the FSA approached enforcement cases, pushing a philosophy known as “credible deterrence”, where the watchdog aggressively pursued a few landmark cases to telegraph a wider message about its priorities. Under her watch, the FSA began criminal prosecutions for offences including insider dealing, and fines against rogue financial companies started to become eye-watering rather than just a cost of doing business, effectively tripling in size.

For this reason, her name was linked to the opening for the top job at Australia’s conduct regulator rather than Apra.

Cole will have to navigate a climate-sceptic government with pension funds that have tried to use their financial heft to mitigate climate change by investing in green assets.

Trustees will face strengthened duty to only act in the best financial interest of members. This measure has attracted criticism from some sections of the fund management industry, and climate campaigners, who fear it will deter long-term investment by super funds in green infrastructure.

Apra is playing a key role in raising standards in the sector, with the first set of benchmarking tests for My Super products scheduled to start in September this year.

Cole and Apra declined to comment.

Additional reporting by Jamie Smyth in Sydney