Have industry funds confounded APRA on political donations?
The structures around Industry Super Australia (ISA) and Industry Fund Services (IFS) have precluded the Australian Prudential Regulation Authority (APRA) from pursuing any action with respect to the perceived involvement of industry funds in making political donations.
APRA has pointed to the structures in explaining why it a list of political donations provided to it by the chair of the House of Representatives Standing Committee on Economics, Tim Wilson, had not resulted in action by the prudential regulator in terms of breaches of the sole purpose test.
Wilson had derived the list of donations from the Australian Electoral Commission (AEC) and asked: “…will APRA take appropriate action to stop superannuation funds and associated entities donating to political parties out of the retirement savings of Australians consistent with the sole purpose test?”
However, while acknowledging that “it is difficult to envisage circumstances in which a direct political donation would be consistent with the sole purpose test” APRA went on to explain why no action had been taken.
“Many of the specific examples within the question relate to the activities of Industry Super Australia/Industry Super Network, Industry Super Holdings and Industry Fund Services. These are not APRA-regulated entities, and not subject to the sole purpose test. The sole purpose test also does not apply to ME Bank,” APRA said.
However, it said that it was currently undertaking a targeted review of expenditure by some trustees as part of its review of the implementation of prudential standard SPS 515 – Strategic Planning and Member Outcomes.
“This review will focus on different categories of expenditure by trustees, and the steps they have in place to ensure that such expenditure is consistent with the sole purpose test and meets trustees’ member best interest obligations. Should this review identify any practices of concern, APRA will take appropriate action to ensure these are addressed,” the APRA response said.
“To support APRA’s oversight of the implementation of new prudential standard, SPS 515 Strategic Planning and Member Outcomes, APRA is currently consulting on the collection of more granular data on fund expenditure, including political donations. The reporting standards to implement the expanded data collection requirements are expected to be finalised in the first half of 2021, with the first data collection due in late 2021. This enhanced data will better enable APRA to identify, investigate and take appropriate action in relation to any expenditure that may not be consistent with the sole purpose test.”
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