Did APRA miss super failings because of poor data?

The Australian Prudential Regulation Authority (APRA) could have identified problems with respect to under-performing superannuation funds sooner if it had actually gathered and analysed the appropriate data, according to industry funds representative group, the Australian Institute of Superannuation Trustees (AIST).

The AIST also urged the establishment of a cross-agency taskforce between APRA and the Australian Taxation Office (ATO) to ensure that the overall performance of self-managed superannuation funds (SMSFs) can be better compared with that of APRA-regulated funds.

The AIST even questioned whether APRA sufficiently understands the data provided by superannuation funds in circumstances where funds and their custodians have had to re-lodge information over multiple periods.

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In a submission responding to APRA’s Post-implementation Review of the Prudential Framework for Superannuation, the AIST urged the APRA to bring members’ best interest into the equation where prudential and reporting standards are concerned.

It said the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services sector had highlighted many cases where members’ best interests were not the applied test with APRA presently using measures which focus specifically upon providers in the industry and whether consumers have incurred losses.

The submission said the measures currently utilised by APRA may be inappropriate because they fail to capture the cost of choice superannuation product compared to MySuper products.

It said that APRA needed a comprehensive data reporting framework and that in the absence of such data there was insufficient information to assess the performance of the superannuation system.

The AIST submission said that APRA had made many comments about the need to improve the accessibility, consistency and reliability of information that was reported to the regulator, but that there continued to be inconsistent reporting on investment costs across funds with some funds not reporting all costs embedded in investment returns (rather than reflected in disclosed fees).

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