The Australian Prudential Regulation Authority’s (APRA’s) handling of superannuation funds needs to be just as transparent as its handling of the major banks, according to Tasmanian Liberal Senator David Bushby.
Amid concerns expressed in the financial planning industry about the manner in which industry superannuation funds have been allowed to operate, Bushby has also suggested APRA might need dedicated and specialist teams to handle superannuation supervision.
In a series of questions on notice directed to APRA, Bushby has specifically raised issues canvassed by some financial planners, including certain personalities holding multiple superannuation fund trustee directorships and how many enforcement actions it has undertaken related to flawed unit pricing and asset valuations.
Speaking to Money Management, Bushby said he believed APRA had done a reasonable job with respect to its regulation of financial services entities, but its handling of superannuation funds was proving harder to fathom.
"Their handling of superannuation funds may well be appropriate, but I believe we need to learn more about what is happening," he said.
Bushby said that in the wake of media reports on MTAA Super and the collapse of the Trio/Astarra funds, he had asked a large number of questions of APRA during Senate estimates hearings, and believed the issues warranted further discussion.
He said in recent years, both the banking sector and financial advice industry had been the subject of increased governance and conflicts of interest obligation, but no similar tightening had occurred with respect to superannuation funds.
"Despite the massive amount of money being managed on behalf of Australians, superannuation funds appear to have fallen between the cracks," Bushby said.
Indicating the Federal Opposition might look to change the legislative arrangements around superannuation funds, the Tasmanian Senator said the Superannuation Industry (Supervision) Act had been in place since 1994, and had been subject to only modest change.
"During this time, financial markets have dramatically changed, with more complex and less secure asset classes and products coming on stream, and there have been technology changes which make it more difficult for regulators to track investor fund movements," Bushby said.
"As such, I believe a number of questions need to be answered," he said.
Bushby said that among those questions was whether APRA’s prudential supervision strategy remained best practice, and whether its cross-functional approach remained appropriate.
"Does APRA now need dedicated teams of experts who do superannuation-only supervision, and should such experts be provided additional supervisory powers?" he said.
Bushby said he was also interested in whether APRA policies on unit pricing and asset valuation needed to be more aggressively enforced, and whether the regulator needed to adopt new enforcement strategies.
