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.
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.