More change ahead for superannuation governance
The Australian Prudential Regulation Authority (APRA) has warned that, while the 2013 prudential framework has led to some improved practices across the superannuation industry, further enhancements are needed for it to remain fit for purpose.
The regulator found that although the objectives of the framework were largely met, the evolution of the industry and changing stakeholder expectations meant that more change may be necessary.
Specifically, APRA believed that the nomination, appointment and removal processes of RSE licensees needed strengthening, as well as more explicit detail on the fitness and proprietary requirements for responsible persons.
The requirements for managing conflicts of interest could also do with strengthening, as could considerations related to outsourcing and insurance inside superannuation arrangements. So too could investment governance considerations, including clarification of the factors licensees must consider for choice investment options.
To manage risk, APRA recommended that the risk management standard be harmonised with the equivalent standard applied to other industries, as with as a review of the operational risk financial requirement. The scope of business continuity management should be expanded to ensure RSE licensees considered the impact of events not directly connected to their business operations.
Finally, the regulator suggested enhancements to superannuation reporting standards, specifically pushing for current definitions to be both suitable and more consistent, for the level of materiality to reflect the purpose who which data was collected, and for appropriate coverage of both choice and MySuper products.
Positively, APRA’s review of the framework also found that stakeholders didn’t identify any material unintended consequences of its implementation.
AUTHOR
Hannah Wootton
Recommended for you
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
