APRA admits to pursuing just one sole purpose test issue in 30 years

Only one superannuation fund has faced action over breaches to the sole purpose test in the past 30 years.

That is the bottom line of evidence given to a key Parliamentary committee by the Australian Prudential Regulation Authority (APRA).

Amid suggestions by Government backbenchers that industry superannuation funds may have breached the sole purpose test within the Superannuation Industry (Supervision) Act by pursuing advertising campaigns, APRA was probed during a hearing of the Senate Economics Legislation Committee about how often the regulator had actually acted against a fund with respect to the sole purpose test in the past 30 years.

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The deputy chair of APRA, Helen Rowell could only refer to “historic action”.

“There is a historic action—and we're going back quite some time—where we did take action against a small fund for, in essence, making an investment that was in breach of the sole-purpose test. That is the only case to date,” Rowell said.

“As we've said on many occasions, it's a principles-based test, and we need to look at issues on their merit. Our focus has very much been on the wider behaviour of trustees and the impact on outcomes for members, and where we can apply our resources to get the most impact most effectively,” she said.

“That has been, over time, focusing on the implementation of prudential standards, heat maps, dealing with underperformance, industry consolidation and working to bring expenses down. That's been our focus.”

Rowell later agreed that the Government’s Your Future, Your Super legislation would give APRA more power to deal with any breaches of the sole purpose test.

“As we've outlined to you in other hearings, we are already doing some work on expenditure—looking at the processes and practices that trustees have in place around various types of expenditure—to form a view as to how they already go about complying with their best-interest-duty and sole-purpose-test obligations. That will inform the way we also supervise these new requirements, should they become law,” Rowell said.




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If only the applied alookback to 2018 to the industry funds and treat the whole industry the same instrad of laying all the blame with the advisers. Watch them squirm and merge and change their names.

This is another great example of why it's such a cop out to say "Regulators don't make the laws, they only enforce the laws passed by parliament."

Regulators have enormous scope to decide which laws they will/won't enforce, and against whom. They also have great scope to interpret ambiguous laws, and in some cases to write their own rules within the boundaries of loosely defined laws. They also have discretion about the target and conduct of "investigations" into certain sectors, and about who they will (and won't) refer to other agencies such as the RC.

At the end of the day regulators can impose their own biases and vested interests on society, independently of the elected parliament. Much greater parliamentary scrutiny of our financial regulators is needed.

Richard Hedware, any ray of pure brilliance regarding union super you'd like to illuminate us all with, in light of this?

How about the ATO with SMSF Trustees and the Sole Purpose Test? How many investigations there and the outcome. I'm suprised that this would even be an issue with APRA regulated funds.

Our licensee fails us at audit on sole purpose test breaches, as simple as a husband paying for advice on behalf of a couple. On the other hand union funds can use members funds as their own personal bank account and APRA and ASIC sit around and twiddle their thumbs. Must be good to be an union fund knowing that you are untouchable.

Yes, it is a dogs breakfast the way that the Sole Purpose Test is being applied and interpreted at the moment, thanks to APRA and ASIC's joint letter. I don't understand why the professional bodies aren't raising hell in Canberra about this. Financial advice should be listed as an ancillary purpose. I mean, seriously, clients take money out of their super for elective surgery and last year used the COVID relief to pay for flat screen TV's. Yet they cannot pay for wholistic financial advice from their super? How absurd.

100% agree. Planners are being ripped. Kicking advisers to create confidence in the super system is not the solution, when these super funds could sponsor a horse race in a brothel and it's considered a good investment. UN-professional bodies that claim to represent advisers, won't do anything, cause they're getting new members and dollars from these Union Super funds now.

I think the sole purpose test has lost all relevance in the current world of superannuation. RIP sole purpose test.

One case in 30 years....you've got to be joking....Perhaps Aware Super using members money to buy StatePlus which then wrote off those bonds due to fee for no service could be investigated.

Old Timer I think ASIC, APRA and AFCA have lost all relevance. I think these bodies are another little empire set up to create jobs for the boys and thousands of jobs for clerical staff. Nice people the ones i've dealt with and helpful but no outcomes. Nothing Happens!!! I have written to all of them, some multiple times, about Superannuation, Death Benefits, Nominations and REST. And no doubt REST Trustees are still deciding who will get the deceased super and db based on anything the Trustee deems Fair. Not Legal. Fair. Not criteria according to their forms. Just Fair! Wiork that one out! Scrap it Scomo!

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