Vanguard Australia hires ASIC commissioner Sean Hughes

Vanguard Australia hopes former ASIC commissioner Sean Hughes will ensure it doesn’t breach regulations as it pushes into superannuation.

Vanguard Australia chief executive Daniel Shrimski. Picture: Luis Enrique Ascui

Vanguard Australia has secured high-profile regulator Sean Hughes from the Australian Securities and Investments Commission to take on the role of general counsel as it prepares to accelerate its push into superannuation.

The ASIC regulator joins Vanguard Australia after a six month job hunt to fill the role.

Mr Hughes, who exits ASIC on February 3, begins at Vanguard Australia five days later and will run legal and compliance operations at the investment house as well as join the executive team.

Mr Hughes departs ASIC almost a year short of his five-year term’s completion which was due to end on December 1 this year.

No replacement has been announced for Mr Hughes, who is the second commissioner to exit ASIC in recent months after ASIC commissioner Cathy Armour finished up in June.

“We are grateful for the contribution Sean has made to ASIC in his role as commissioner and wish him well in the next stage of his career,” ASIC chair Joe Longo said.

ASIC said Mr Longo, deputy chairs Sarah Court and Karen Chester, and commissioner Danielle Press would continue to work with the chief operating officer and the executive team.

Mr Hughes told The Australian Vanguard presented an opportunity “just too good to turn down”.

“With one of the newest superannuation offerings on the Australian market, it’s obviously seeking to be competitive – particularly from a low-cost proposition,” he said.

“It’s something I’ve reflected on very carefully given I’ve spent a long time of my professional career at ASIC; I’ve still got years under the belt to go and I want to be fully involved.”

Former ASIC commissioner Sean Hughes has joined Vanguard Australia.

Vanguard Australia managing director Daniel Shrimski told The Australian Mr Hughes would bring valuable experience in law, governance, regulation, and superannuation risk.

“We’ve been through an extensive six-month process’ Sean was part of that, we absolutely found Sean, we had numerous discussions with him locally and with our US parent,” he said.

“His expertise is going to help us across the board; he’s going to work with the local team and the global team in continuing to make us better – we’re operating in a complex space.”

Vanguard has picked up several staff from the regulation space in recent years.

The hiring of Mr Hughes by Vanguard coincides with the financial services giant starting its advertising campaign spruiking its superannuation products.

Vanguard Australia launched its superannuation products in November in a bid by the $10.6 trillion investment giant to grab territory from industry and retail funds.

The Australian Prudential Regulation Authority granted Vanguard Australia its superannuation entity licence in August 2022.

Mr Shrimski said Vanguard’s move into superannuation had created more complexity, after the firm moved to close most of its institutional business in 2020.

This came after superannuation providers, which previously used Vanguard as an asset manager, moved to bring control of the investments in-house.

Vanguard’s operations have not been without incident. In December ASIC criticised it over alleged greenwashing in three of its funds. Vanguard paid a $39,960 compliance penalty in December, after ASIC took issue with the company’s disclosures related to tobacco and cigarettes.

The Vanguard products claimed to prevent investments in companies involved in significant tobacco sales, but ASIC alleged while this blocked cigarette and tobacco manufacturers it did not exclude companies involved in their sale.

Mr Shrimski said Vanguard had corrected the disclosures in its documents.

“It was certainly completely inadvertent,” he said.

Mr Shrimski said although Vanguard had a “fantastic brand” in the financial adviser space, the company had little penetration in the direct-to-consumer market.

“We’ve been pleasantly surprised by the demand we’ve had, with over 1000 people signing up on day one,” he said.

Vanguard’s Super SaveSmart product charges customers a 0.58 per cent administration and investment fee. Some superannuation analysts have taken issue with the fund’s costs.

Mr Shrimski said Vanguard would look at reducing pricing as the firm built scale in its products and would “deliver the benefit back to investors”.

“I would look at the pricing and say it’s amongst the most competitive,” he said.

Vanguard has tried to grab a chunk of the superannuation market in the past,

The company entered the market in 2000 with joint venture partner MLC under the Plum Financial brand and had offices in Sydney and Melbourne.

Vanguard sold its stake in 2003 after incurring losses.