The current industry superannuation funds campaign against Government’s Your Future, Your Super legislation could act as a catalyst for the Australian Prudential Regulation Authority (APRA) taking action over breaches of the sole purpose test.
APRA has revealed that 12 funds are under scrutiny with respect to their expenditures, notwithstanding the fact that the regulator said it was not empowered to deal with Industry Funds Services (IFS) because it is an industry association.
Faced with questioning by the chair of the House of Representatives Standing Committee on Economics, Tim Wilson, APRA revealed that Wilson had already been on its case with respect to the industry funds campaign, which Wilson described as being an “effort to bully and intimidate the Government and through it the Parliament”.
“We currently have a campaign being run by an industry body on behalf of some superannuation funds and it seems like an effort to bully and intimidate the Government and, by default, the parliament of Australia,” he said. “How is that consistent with the sole purpose which is to advance the interests of members and their returns for retirement?”
APRA chair, Wayne Byres referred to earlier correspondence between APRA and Wilson and said that there was “no black and white rule on advertising”.
“You have to look at each case on its merits,” Byres said.
“We became aware of that case last week and we are looking at it. Clearly it’s a campaign by an industry association and the members of that industry association obviously contribute but we don’t directly control an industry association so we have to have a look at the circumstances by which funds decide and look at the value they extract from their participation.”
APRA deputy chair, Helen Rowell said that the regulator was engaging with the superannuation trustees who are linked to that campaign to understand the decision-making process and the analysis that was undertaken by that trustee.
She said that APRA was looking at 12 funds in terms of expenditure and that there were two or three where APRA had gone back looking for more information.
“We do not yet have all of that information so we have not yet formed a view,” she said.