The Australian Prudential Regulation Authority (APRA) has called on superannuation trustees to examine how they can improve their governance following three reviews.
The regulator had undertaken three thematic reviews over the last 12 months which outlined the risks and vulnerabilities that trustees needed to keep front of mind. These included business performance reviews, expenditure and unlisted assets.
Within the benchmark review, APRA found greater connection was needed between business performance reviews and updates to business and greater clarity was needed on how strategic objectives supported member outcomes.
Looking at expenditure, it found failures by many trustees to rigorously measure benefits of marketing and advertising and an inability to demonstrate how sponsorship benefits improved member outcomes.
Earlier this year, EISS chief executive, Alex Hutchison, left the super fund after problems related to the fund’s excessive sponsorship of sports teams.
On a positive note, the unlisted asset valuation review demonstrated a ‘proactive approach’ by trustees to revaluing unlisted assets in response to market volatility but found revaluation frameworks needed improvement and board engagement was limited.
APRA member, Margaret Cole, said: “These reviews illustrate that robust frameworks, clear accountability and holistic approaches to business planning are essential ingredients in running what are, in most cases, multi-billion-dollar businesses with enormous fiduciary responsibilities. We expect all trustees to review their operations in light of these findings with a view to identifying any sub-standard practices and improving processes and procedures”.
She said the regulator had asked trustees to demonstrate how their super fund complied with the new best financial interests duty and that APRA would consider any action once this information had been compiled.