APRA outlines super funds’ monitoring of advisers
The monitoring of financial advisers by superannuation trustees is among issues raised by a thematic review of outsourcing in super.
In a review conducted by the Australian Prudential Regulation Authority (APRA), which surveyed a sample of 10 retail superannuation trustees between 2019 and 2021, one area covered was performance measurement and monitoring.
The review covered how this applied to administration, financial advice, investment management and insurance.
Trustees were required to monitor and support the effective measurement of member outcomes and clearly define and measure service standards that balanced value, quality and efficiency. These service providers could include a related party that provided financial advice to members of the super fund.
This was particularly prevalent given proposals in the Quality of Advice Review which would see super funds have an extended reach to provide advice for their members.
APRA suggested data compliance was used to monitor the compliance status of any advisers used as well as monitoring of advice fees charged.
In a better practice example, APRA recommended: “A trustee used system-based tools, including data analytics, to monitor the compliance status of financial advisers of a related party that provides advice to fund members. This included monitoring where advice fees were deducted from member accounts, and fees as a percentage of account balance, to ensure there had been no inappropriate erosion of account balance”.
A poor practice would be a lack of rigour demonstrated in monitoring, slow performance reporting and a heavy reliance on data with little supporting analysis.
AUTHOR
Laura Dew
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Is there anyone else who would like to monitor advisers out there? ASIC, Licensees, end user client, anyone?