APRA threatens to name and shame under-performers

At least three superannuation funds have been placed on notice that they risked being named by the Australian Prudential Regulation Authority (APRA) as under-performing outliers.

The three funds, as yet unidentified are those that APRA deputy chair, Helen Rowell, said had not responded adequately to the regulator to explain or deal with their perceived under-performance.

Addressing the Conference of Major Superannuation Funds (CMSF) on the Gold Coast, Rowell lamented the fact that the Parliament had not yet passed the legislation necessary to deliver the regulator a “directions power”.

“It is a pity that the Members Outcome Bill – which provides an expanded directions power and the ability to take civil penalty action for breaches of obligations to members – has not yet passed the Parliament,” she said. “As our ability to compel action is more limited than we would like. But we will be using whatever tools and powers we have to get action.”

“Of the 28 outlier funds we identified 18 months ago, only three have still not responded adequately – and these will soon be resolved. For now, we don’t intend to disclose which funds make this outlier list, recognising that being effectively labelled among the ‘worst-in-show’ is likely to hurt the financial interests of members,” Rowell said. “But I do stress ‘for now’”.

“We are actively developing ways to provide greater transparency around the outcomes individual funds and products are delivering their members, thereby making performance clearer to all,” she said.

“We will continue conducting ‘deep dive’ reviews across the industry on particular areas of prudential concern,” Rowell said. “Outsourcing – in particular to related parties – will be an early target, making use of external expert resources to enable us to cover more ground and probe more deeply and effectively.”

“We will also consider how we can publish more about the findings of these reviews, potentially including details of the specific superannuation entities and the assessment of their practices in the areas covered. This marks a step change in APRA’s approach, consistent with our commitment to enhanced transparency.”