It’s been a busy week for Charles Littrell, who also took a swipe at the insurance industry during a speech in Melbourne. He singled out life insurance and superannuation entities as having an ethical duty to manage “conflicts of interests”.

Speaking at the Sustainable Governance Conference last week, he said life insurance and superannuation entities are in the unusual position of having trustees and board members that have a duty to look first to the interest of policyholders and members.

“Normally, a board’s first duty is to shareholders,” Mr Littrell said. “The super fund member assumes both the traditional customer role and something akin to a shareholder role. But trustees have other competing interests to manage, notably employer-sponsor expectations, and in for-profit funds the corporate manager’s expectations.”

He said APRA is concerned about “a fundamental conflict in distribution” in these industries because they use financial advisers who are largely commission-based.

“There is potential for advisers to vet inadequately the risks of the investments they are selling,” he said. “If enough investors buy enough risky product from the same super fund, life company or other regulated entity, then in short order that entity’s balance sheet will be concentrated in overly risky business and APRA may be forced to intervene.”