Industry funds appear to have done little to justify what they spend on advertising campaigns such as the latest Industry Super Australia (ISA) “fox in the henhouse” advertisements.
Answering questions on notice emanating from Senate Estimates, the Australian Prudential Regulation Authority (APRA) has revealed what the industry funds have told it with respect to meeting their obligations under the so-called “sole purpose test”.
The regulator has told Senate Estimates that as part of its regular supervision activities, it had “discussed this advertising campaign with Industry Super Australia (ISA) and a number of the RSE [superannuation fund] licensees that are represented on the board of ISA”.
“In particular, APRA has asked responsible persons at these RSE licensees how they and their boards had satisfied themselves that the advertising expenses that have been incurred are in the best interests of their beneficiaries and consistent with the sole purpose test,” APRA told Senate Estimates.
It said the relevant RSE licensees “have advised that they based their decisions to incur the advertising expense on independent research (including focus groups of members and non-members) that showed the potential value of the advertising with regard to member retention and ongoing viability”.
“Decisions to participate in the campaign were also supported by legal advice regarding the sole purpose test,” the APRA answer said.
The chair of the Senate Economics Committee, Liberal Senator, Jane Hume had referred to the latest industry funds advertising campaign and had asked senior APRA officials whether they believed it met the sole purpose test.
Senator Hume also asked whether the APRA officials believed the campaign represented a good use of member’s money.