APRA statistics don’t add up

Deen Sanders

Just weeks after the Federal Government announced increases in the levies funding the three financial services regulators, the Australian Prudential Regulation Authority (APRA) has had to defend its decision to hold a key conference on statistical collections in league with the University of NSW and to limit the number of industry representatives.

Defence of the conference and the number of financial services invitees came amid suggestions that the largely academic setting allowed APRA to avoid answering important industry criticisms of the accuracy and usefulness of the data it publishes.

Those industry concerns were reflected in a statement issued by the Financial Planning Association (FPA) in response to reports that the Minister for Superannuation and Corporate Law, Nick Sherry, would be initiating a review of superannuation and the role of financial planners.

The deputy chief executive of the FPA, Deen Sanders, said “the FPA will be encouraging a good hard look at data provided by the regulators at the moment”.

“Improving the poor quality of data around costs to consumers will mean better information to improve the community’s understanding of the value and costs of advice, and better means of comparing the various sectors,” he said.

Similarly, the chief executive of the Investment and Financial Services Association, Richard Gilbert, has confirmed he has written to the Government seeking an improvement in the quality of the data provided by APRA.

Gilbert maintains that while the integrity of the data collection is sound, the aggregated nature of its publication can be misleading to policy-makers and consumers. He has suggested a role for the Australian Bureau of Statistics in more clearly untangling the data and presenting monthly performance and costs reports.

Reinforcing the criticism, respected actuarial firm Rice Warner has this year already questioned the validity of material published by the regulator on the relative performance of public sector, corporate, industry and retail funds.

According to Rice Warner, a chart published in an APRA statistical bulletin “fails every test under the Australian Securities and Investments Commission’s disclosure regime”.

Industry attitudes towards the regulator were not helped when, a few weeks later, APRA deputy chairman Ross Jones was quoted as telling a Melbourne forum that “the profit motive may diminish the alignment of interests between a fund and its beneficiaries”.

Asked by Money Management to explain why it had opted to hold its conference with the University of NSW Centre for Pensions and Superannuation, APRA said it had done so “to encourage offshore and out of town academics to attend”.

When asked why so few industry representatives were present, APRA said that the attendee split was about one-third academic, one-third from various Commonwealth agencies and one-third private sector.

“As a practical matter, we speak with super funds all the time about our statistics, and we wanted to ensure that we also heard the views of other representatives on the day. This conference was intended to generate broader perspectives and succeeded in doing so, ” APRA said.