APRA rolls over on superannuation fund delays
In the wake of concerns about APRA's handling of the collapse of Trio Capital it has emerged that the regulator has little or no idea how well superannuation funds perform with respect to rollovers.
Tasmanian Liberal Senator David Bushby has been like a dog with a bone when it has come to scrutinising the performance of the Australian Prudential Regulation Authority (APRA) with respect to its regulation of superannuation funds.
And perhaps the Tasmanian Senator has a point in circumstances where the performance of APRA was found wanting in relation to its handling of the collapse of Trio Capital and where, just last week, it emerged that the regulator had little or no idea of how well superannuation funds were performing with respect to handling superannuation rollovers.
APRA admitted in answer to a question on notice from Senator Bushby that it did not hold a particular view on what represented ‘best practice’ with respect to superannuation rollovers – an admission which suggests the regulator is guilty of focusing too much on regulatory machinery and too little on consumer outcomes.
Financial planners have for years been complaining about how long it takes some superannuation funds to undertake the mechanical process of rolling a client from one superannuation fund into another. Rightly or wrongly, industry super funds have been identified as particular laggards.
Given the number of vociferous complaints which have been aired about rollovers, it seems remarkable that, as the relevant regulator, APRA had not kept a closer watch on the issue and made some effort to measure performance. That it has not, does not reflect well upon the organisation.
APRA’s seeming inaction also raises the question of whether it has bothered to observe the work of the Superannuation Complaints Tribunal (SCT) and the number of occasions on which it has dealt with claims that superannuation fund members have ended up being financially disadvantaged by the amount of time it has taken for a rollover to occur.
In the immediate aftermath of the global financial crisis, the SCT determined a number of cases where superannuation fund members claimed to have suffered financial loss because of the amount of time taken by funds to action changes to both investment settings and, in some cases, rollovers.
Notwithstanding their status as the watchdogs of the financial services industry, regulators such as APRA and the Australian Securities and Investments Commission should not be above scrutiny as to their own performance.
Indeed, it is worth remembering that in the immediate aftermath of the collapse of major insurer HIH, there was substantial change at the highest levels of APRA.
The collapse of Trio Capital was no less significant than that of HIH, and admissions such as those made by APRA in response to Senator Bushby's question suggest it is time for those running the regulator to reflect upon their own performance.
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