Treasurer Peter Costello has announced the appointment of Dr John Laker as chairman and Ross Jones as deputy chairman of theAustralian Prudential Regulation Authority(APRA), with a full time three member executive group to replace the board in the governance structure of the regulator.
The change in the APRA governance structure, made in response to recommendations made by the HIH Royal Commission, has resulted in the retirement of incumbent chairman Dr Jeffrey Carmichael, and departure of chief executive officer Graeme Thompson and the other members of the board.
Laker is currently assistant governor (financial systems) at the Researve Bank of Australia, while Jones is a commissioner at the Australian Competition and Consumer Commission and associate professor of economics at the University of Technology, Sydney.
The Treasurer will also recommend to the Federal Executive Council, meeting next on June 30, that the third position in the new executive group should be filled by CPI Group chief executive Stephen Somogyi for a three-year term.
In other APRA news, the regulator today announced the results of its survey on superannuation assets invested in hedge funds, finding that 15 per cent of surveyed trustees reported making hedge fund investments, and that on average these investments accounted for just over 4 per cent of their portfolio, with a small proportion reporting hedge fund exposures of over 10 per cent.
The survey also found that superannuation trustees achieved diversification by either splitting their investment between two hedge fund managers or using a fund-of-hedge-fund manager.
However APRA had concerns over trustees’ uncertainty of the specific investment strategy being utilised by their hedge fund managers, and those superannuation funds with sizeable hedge fund investments.
APRA general manager – specialised institutions division Wayne Byres says, “We will be confirming with those trustees that they have conducted appropriate due diligence and that they have access to adequate information on investment performance. We will also be asking them to justify the use of hedge funds within their investment objectives.”
Byres says APRA intends to continue work with the Alternative Investment Managers Association (AIMA) on developing guidelines for superannuation trustees on hedge funds, repairing the relationship damaged earlier this year when APRA cautioned trustees against the uninformed use of hedge funds, prompting an outcry from the hedge fund industry.
