APRA’s heatmap is unclear for consumers

While the Australian Prudential Regulation Authority (APRA) MySuper Product Heatmap is a step in the right direction, the information is not presented clearly to consumers, according to Chant West.

Speaking at an IBR conference, Ian Fryer, general manager, Chant West, said it was helpful that APRA provided clear definitions for net investment return and net returns in its standards but that some areas were lacking in proper standards.

“The problem with the heatmap is the information isn't really [presented] in a way that's accessible to members to enable them to compare funds in a clear way so I think a lot more can be done there,” Fryer said.

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“If you look on fund’s websites and product disclosure statements, there's a whole range of different performance that's disclosed there and often it's not net investment returns and it’s not net returns – it's something else and they’re not comparable.

“Sometimes they’re net of some fees and not others, sometimes they’re based on a soft close – so unit prices that don’t reflect transaction unit prices.”

He said some funds had different tax structures which could not be adequately compared.

Adding to Fryer’s thoughts, David Bell, executive director, The Conexus Institute, said it was broadly accurate that APRA was not set up to being a consumer facing regulator.

“There’s a lot of skills and talent required in how to frame information and present information so it can be used by consumers,” Bell said.

Bell also pointed out APRA was the administrator of government policy and not the designer of it.

He said the heatmap contained four investment metrics and a 34-page document to explain them.

“A: it’s a spreadsheet and B: there are a lot of tabs and hidden columns so is that really the easiest way for consumers to make use of that information? I’d probably say no,” Bell said.

“And so that leads the reflection for me is are other consumer dedicated services required to really help members make effective decisions that present information accurately, like what Ian’s described, but also in a way that can be well understood and used.”

Bell said the Your Future Your Super (YFYS) comparison tool was one of the first attempts made by policymakers to provide clear information to the consumer, but that there were a lot of shortcomings with it.

One of the major flaws in the YFYS comparison tool, he said, was that it only relied on one metric, ranking funds based on fees and net returns.

Meanwhile, the APRA Product Heatmap, which Bell said was more effective at comparing funds, had four metrics: performance adjusted for growth exposure, performance relative to benchmark portfolios, measure which accounted for admin fees and another which did not.

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APRA another fine example of bureaucracy living only in their Canberra bubble.
Zero real world reality.
Great job Frydenberg, another great example of 8 years of your oversight to produce useless bureaucratic rubbish.

Given how super funds take great steps to make it difficult for any consumer, well trained or not, to compare funds then it is no wonder that APRA is having trouble in producing a relatively simple model to assess comparability of offerings. The bureaucracy is in the funds - retail or industry. I've heard some financial advisors say they like the obscurity and opaqueness of the T&Cs provided by the super funds for obvious reasons.

Given what you have been saying about APRA it is time that you joined APRA and pricked the bubble from the inside.

Oh poor APRA, if they really wanted they could make the reporting / descriptions / websites follow same standards for all reporting, all funds, like is done elsewhere.
But hey Hedware, imagine if the Industry Funds with 94% Growth Assets, as per the APRA heatmap, were allowed to call that a Balanced Fund.
What a disgusting joke.
APRA clearly identify this and what happens?
APRA do nothing.
ASIC do nothing, yet ASIC are chasing others for “true to label”.
Clearly rules don’t apply to Industry Super.
And if Industry Super don’t want these fixed APRA & ASIC won’t.
As for me in Canberra, turn Lake BG into an epic wave pool and I may sign up.
Besides that, the last thing the Canberra bubble bureaucrats want to hear is real world experience. So that counts me out.

All super funds have variations of Growth, Balanced, Conservative, Factor and so forth and all incomparable with each other. I was hoping that the heat map thingy might force some commonality of terms and features to allow for consumers to compare funds and what they are getting or might get in the way of benefits.

But as to your last comment I say coward. You can't change much if pissing from outside the tent.

Yeh huh huh I’m the coward.
You understand the how utterly False your Industry Super “Balanced Funds” are but you do zero about it from inside the tent.
So whose the Coward ?
“We’re all in this together” for the members, unless it’s for Industry Fund spin, BS and profits moved sideways for the big Union boys with associated Admin services, etc.
Yeh, typical Union’s talking about members but lining their own pockets is the key goal.

Thats the issue. Irrelevant of which super fund, in order to properly compare them all, the first thing that needs to be done is enshrine what growth/defensive split is a 'growth, balanced, conservative fund' etc.

They also need to make it clear that property, infrastructure and at risk credit is not 'defensive'.

Only then can you compare performance accurately, everything to that point is moot.

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