The Australian Prudential Regulation Authority (APRA) has been warned that its controversial superannuation fund performance heatmaps will be skewed as funds transition to the RG97 regime.
At a time when superannuation funds are already questioning some of the underlying methodology of the heatmaps regime, the Association of Superannuation Funds of Australia (ASFA) has told APRA that the regulator’s fees and costs disclosure regime together with the heatmaps risk being skewed by the introduction of RG97.
It said that it would be important for fee disclosures to be disclosed as being either “pre” or “post” RG97 because to do otherwise would risk comparing apples with oranges.
Answering APRA questions around any difficulties in making the RG97 transition, ASFA said that, “potentially there will be substantial difficulties in using data for comparative purposes during the transition period for RG97 as funds will be reporting based on different standards”.
“This transparency issue can potentially be mitigated by ensuring funds adequately disclose and communicate whether their fee disclosure aligns with RG97, as failure to do so could inadvertently potentially advantage or disadvantage some funds over other funds and mislead consumers,” it said.
“If funds become RG97 compliant at different times, what are the flow on implications that potentially could affect heatmap results?” the ASFA response asked.
“APRA as the regulator is using the heatmap results to publicly rank fund performance and justify supervisory activities. Accordingly, it is essential that there are clear and appropriate disclosures as to whether or not funds comply with RG97 and these are communicated, which would facilitate comparisons to be made between funds that comply with RG97 and those that do not.”
