Cost of compliance outweighing benefits – ASFA

The costs of breach reporting to the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) exceed the benefits that accrue to fund members, according to the Association of Superannuation Funds of Australia (ASFA).

ASFA principal researcher Ross Clare told the organisation’s annual conference in Perth that the aggregate ongoing cost of compliance were substantial and had increased rapidly in recent years.

“Compliance costs now amount to, on average, around 10 per cent of the total administration costs of the funds they relate to,” he said. “Increased compliance burdens have made a substantial contribution to the 10 per cent or more a year increase in administration costs experienced by a range of funds in recent years.”

Clare said the relevant question was whether there had been value for money from the current compliance regime, and while available evidence and analysis indicated some benefits have been delivered, “not all regulatory interventions have benefits exceeding the compliance costs”.

“The regime of breach reporting to both APRA and ASIC is one where the costs of compliance appear to now exceed any benefits that accrue to fund members,” he said. “Given that the cost of compliance is ultimately paid by fund members, this is a matter for concern.”