APRA lacks oversight of super fund’s Russian assets

While the Australian Prudential Regulation Authority (APRA) has warned superannuation funds to divest Russia assets, it will not be checking whether they have done so.

Speaking at the Senate Estimates, APRA member, Margaret Cole, was asked by Senator Jess Walsh about its statement about funds divesting Russian assets and whether it had any way to monitor that.

The regulator issued a statement in March that it would not be taking action against super funds if they divested Russian assets.

“Did you put something in place to monitor what then occurred in relation to funds divesting at appropriate times in the context of best financial interests? Can you tell us anything about what has actually occurred?,” asked Walsh.

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Cole replied: “There are certain things happening. Some of the peak bodies are putting out their own guidance. We've been in consultation with some of them about putting out guidance to super funds on sensible ways to go about this. That is one point.

“The other point is we would expect such issues to come up in the course of our normal supervisory relationship with funds. Obviously, it wasn't possible for them to take immediate steps. So it's a declaration of intent. We're not following up and saying, 'Have you done it?', in that sense. We need to leave it to the trustees and their investment managers to approach the divestment in a sensible way that pays attention to their duties. We recognise how difficult that might be.”

Senator Walsh also stated APRA’s statement was a “unique” statement by the organisation and questioned if it equated to the Government telling super funds what they could and could not invest in.

Senator Jane Hume, minister for superannuation, financial services and the digital economy, said: “The statement that we issued was that there was a strong expectation that super funds would review their investment portfolios and then take steps to divest any holdings in Russian assets. Of course, that's aligned with our national interests. We would have thought that it would be members' expectations that their super funds would do the same.

“We will never direct a superannuation fund as to how to invest or divest its assets. We would never direct a superannuation fund to invest in infrastructure, for instance, be it for nation-building purposes or whatever it might be. That would be entirely inappropriate.”