Superannuation funds warned on third party promoters
The way in which superannuation funds are marketed by third parties has been flagged as an issue by the Australian Prudential Regulation Authority (APRA).
The regulator has written to superannuation fund trustee boards reminding them that, as Registrable Superannuation Entities (RSEs), they remain at all times legally responsible for commonly outsourced activities and that "fund promoter" activity including marketing must be treated as "material business activity".
While the APRA letter does not specifically mention television advertising such as the Industry Super Network's (ISN) 'compare the pair' campaign, such campaigns run by third parties fall under the fund promoter activity descriptor.
The regulator said it had noted that despite the obligations of superannuation fund trustees to treat marketing and other fund promoter activity as a material business activity, there were numerous examples where this was not occurring.
"APRA has observed that there are numerous examples in the industry in which outsourced activities to fund promoters are not being treated by RSE licensees as 'material business activities' that need to satisfy the requirements of the Outsourcing Standard," the regulator's letter said.
It said that, specifically, there had been cases in which the requirement to have in place a material outsourcing agreement, with the prescribed terms and conditions, had not been met.
The letter said that RSE licensees were reminded that APRA also expected that they would at all times exercise their own independent and informed judgement in relation to decisions concerning the fund, including on such matters as product design, investment strategy and types of investments that the RSE licensee is to offer to members.
"RSE licensees should not be unduly influenced by the expectations or interests of third parties (which may possibly include the expectations or interests of Fund Promoters)," the letter said.
AUTHOR
Mike Taylor
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