APRA moves ahead of legislation on outcomes test

The Australian Prudential Regulation Authority (APRA)  has signalled it does not intend waiting for the Government’s superannuation legislation to pass the Parliament by today releasing a set of new and enhance prudential requirements for superannuation funds, including an outcomes test.

In doing so, APRA deputy chair, Helen Rowell acknowledged that the regulator was moving ahead of the passage of the Government’s legislation intended to underpin the outcomes test - the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No.1) Bill 2017.

“APRA’s proposals are consistent with the outcomes assessment proposals in the Bill, and are being introduced now to maintain industry momentum towards delivering improved outcomes for members,” she said.

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Rowell said APRA would review whether amendments were needed to the prudential framework requirements if the Bill was passed by Parliament in future.

The APRA deputy chair also emphasised APRA’s strong support for the other reforms contained in the Bill and, in particular, the enhanced directions powers for APRA, the strengthened MySuper authorisation and cancellation provisions, and the requirement for APRA to approve changes of ownership of RSE licensees.

“These new policy proposals address weaknesses in the current superannuation regulatory framework and would greatly assist APRA in driving the superannuation industry towards addressing underperformance and improving member outcomes,” she said.

Rowell’s statement said APRA’s finalised package of measures is the culmination of extensive industry engagement that commenced in August 2017, and includes amendments to the original proposals taking into account the feedback received during consultation.

The commencement date for the new measures had been set as 1 January 2020, to provide industry with sufficient time to meet the new requirements.




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Glad APRA and ASIC do not create the laws, just administer them.... Whoops. Sorry. APRA is now setting standards without the law in place. That would not be confusing to anyone.

Try Vanguard?

Am I miss reading this? Can someone please explain this. Will it not simply encourage index hugging and that's it?

Dear Anonymous, Are you referring to the proposed law or APRA acting prior to parliament passing laws?

Yes, the way I see it, they are basically telling every manager to manage to a benchmark and don't under perform that benchmark. The result will be no active management - simply buy the APRA set benchmark and put your feet up on the desk. I hope I'm wrong as guess what - everyone is in trouble and APRA will be responsible for determining returns forevermore.
Just tell me I don't understand the proposal and I will be happy.

APRA is not only moving ahead of legislation, it's action flies in the face or the Royal Commissioner's interim report which made it clear that further regulation was not necessarily the way to fix the problems uncovered in the industry. Further, imposing additional regulation at this point of time, when the final recommendations of the Commissioner are not known may in fact result in funds incurring costs both now and then again if the Regulators are restructured. Thus doing exactly the opposite of what they say they are trying to achieve i.e. potentially negatively impacting outcomes. The reality is that this is a brazen attempt by APRA to show that they are actually doing something and the save their own neck.

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