Regulator must demonstrate consistency
The Australian Parliament’s primary supervisory watchdog, theAustralian National Audit Office(ANAO), has recommended tightening theAustralian Prudential Regulation Authority’s (APRA) supervision of superannuation funds, claiming more consistency is needed.
In a report tabled in Parliament late last week, the ANAO recommended that as well as improving APRA’s supervisory accountability of super funds, it should also undertake risk assessments of all regulated super funds and approved trustees for which it is responsible.
The ANAO says the peak regulator’s review of super funds and approved trustees has been impacted by reorganisation, relocation, and changes to case selection and auditing methodologies.
“A risk-based supervisory approach has yet to be consistently and comprehensively applied in relation to all superannuation funds regulated by APRA,” the report says.
“Some two-thirds of the superannuation funds supervised by APRA were not allocated a risk rating.”
The report also notes that supervisory action within APRA varies significantly depending upon which of its supervisory divisions is responsible for a given fund or approved trustee.
“ANAO considers that there are a series of administrative improvements that APRA can initiate to enhance its prudential supervision of approved trustees and superannuation funds,” the survey says.
“As to operation processes, ANAO consider that improvements can be made to the timely documentation of APRA’s supervisory review of superannuation funds and the development of a standard supervisory approach to approved trustees.”
Responding to the ANAO recommendations, APRA says it accepts the overall conclusions of the report and recognises the need for administrative improvements to enhance its prudential supervision.
“In APRA’s view, the complexity, size and diversity among the superannuation entities it supervises, requires it to tailor its supervision stance in terms of strategy, approach and resource,” APRA says.
“APRA will refine its risk-based supervision approach and methodology to ensure the consistency of supervisory action plans and documentation.”
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
