APRA deputy chair Helen Rowell
APRA deputy chair Helen Rowell

APRA has expressed disappointment that superannuation fund trustees have so far largely declined their invitation to work together on new Business Performance Review (BPR) and Outcomes Assessment (OA) obligations.

In a letter sent to trustees yesterday APRA says it has “consistently encouraged” RSE licensees to engage early with the regulator on the design of the documents “due to the level of complexity involved”.

“Despite this,” the letter states, “APRA has seen a low take-up of this offer and is concerned that the lack of trial outcomes assessments being shared with APRA may be indicative of a lack of preparedness by the industry.”

“There are numerous considerations that RSE licensees need to work-through in order to fulfil these obligations,” the letter continues. “And the complexity in doing so will be commensurate with the complexity of RSE licensees’ operating models and diversity of their product offerings.”

Both new obligations are due to begin soon; the first BPR needs to be completed at the end of 2020 while the first annual Outcomes Assessment must be published near the end of March.

The obligations are a result of Prudential Standard SPS 515, embedded into the SIS Act in January this year, which fortifies APRA’s role in overseeing the strategic planning and member outcomes of superannuation funds.

The BPR obligates funds to assess their own performance in meeting their objectives, chart a course for improvement, consider the design of their products against relevant benchmarks and check if their operations are still supporting member outcomes. There will be a particular focus on the funds’ actions taken in relation to the pandemic, APRA noted.

The regulator took an almost parental tone in scolding the industry for its reluctance to engage on the BPR, and referenced it’s recent article on consolidation in a thinly veiled threat to funds that don’t “continue to challenge themselves”.

“The role of an RSE licensee is a privilege and not a right, and for many funds in the superannuation industry today, the best path forward to secure the future of their members for the long-term may be to merge or exit,” the letter – signed off by APRA Deputy Chair Helen Rowell – states.

The Ongoing Assessment obligation asks RSE licensees to show that members’ interests are being promoted via the products they hold, in particular the MySuper options.

“APRA reiterates the imperative to prepare early for these assessments,” the letter states.

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at tahn.sharpe@conexusfinancial.com.au
Leave a comment