Just a day after the Australian Securities and Investments Commission (ASIC) signalled a tough approach on super fund underperformance, the Australian Prudential Regulation Authority (APRA) has sent a similar message to the sector.
The regulator specifically pointed to superannuation fund under-performance as a key ongoing focus in its corporate plan covering the next five years.
It said many superannuation products delivered good outcomes for the majority of superannuation members in a stable environment but said there remained areas of persistent underperformance in the industry, as highlighted by the Productivity Commission (PC).
The APRA corporate plan said the Royal Commission had also outlined specific examples where superannuation trustees did not appear to be putting members’ interests first, highlighting concerns with governance and management of conflicts of interest.
“A lack of comparable and transparent information makes it difficult for superannuation members to make informed decisions and there are few products available in the market to manage longevity risk,” it said.
The APRA Corporate Plan followed on from that of ASIC and a speech by its chair, James Shipton, in which he said the regulator was committed to taking action against trustee misconduct and that it would be looking particularly at trustee behaviour that caused monetary loss to members, financial exclusion, loss of market integrity and confidence and behaviour that undermines competition.
A member of the super fund has approached ASIC to investigate potentially misleading or deceptive representations by UniSuper regarding the holdings of its sustainable portfolios.
The median growth fund delivered 1.9 per cent in March, adding to the “stunning” rally that has seen super funds gain 11 per cent since November.
Vanguard has affirmed its support for the current super performance test, emphasising the importance of keeping the process straightforward.
While some superannuation funds have gone down the route of internalisation, others say they favour ‘smart partnering’ with external managers for diversification appeal.
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