The major superannuation funds do not want the fees they pay under the so-called “APRA levy” to be used to cross-subsidise regulation of other sectors of the financial services industry.
The view of the funds has been made clear by the Association of Superannuation Funds of Australia (ASFA) which has used a submission to the Federal Treasury responding to the Australian Prudential Regulation Authority (APRA) capability review to argue strongly against regulatory cross-subsidisation.
The submission said the superannuation funds wanted to know what their fees were actually paying for and whether the money was being used appropriately.
“Transparency is particularly important given APRA collects an annual levy from trustees that involves full recovery of all supervisory costs incurred by APRA,” it said. “Funds raised from the APRA regulated superannuation sector should not cross-subsidise regulation of other sectors, providers or financial services.”
The submission argued that cross-subsidisation of other activities was not equitable and contributed to higher fees in superannuation without improving outcomes for fund members.
“The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommended a new oversight body be created to biennially assess the effectiveness of regulators and evaluate performance. For transparency, the report would be laid before the Houses of Parliament,” the ASFA submission said. “ASFA supports this recommendation in-principle.”
Elsewhere in its submission, ASFA argued for APRA and the Australian Securities and Investments Commission (ASIC) to emulate what they had done in the life insurance claims area by conducting a greater level of joint supervisory action.
It said that in such cases, publication of joint reports or guidance material would be particularly beneficial because it would provide clear messaging to industry participants and positive confirmation to all stakeholders.