SuperRatings to APRA on heatmaps – WHY?

12 December 2019

The Australian Prudential Regulation Authority (APRA) needs to explain why it is collecting, interpreting and then publishing information in the public domain around superannuation heatmaps because it shouldn’t be, according to the founder of SuperRatings, Jeff Bresnahan.

Bresnahan has reacted to the release of the heatmaps by suggesting that instead of regulating, APRA was now “trying to play the shame game”.

“But there is a real risk that some of those shamed will be the wrong funds,” he said. “The problem is that no one in the industry wants to tell the regulator that they have got it wrong.”

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Bresnahan claimed that, effectively, APRA was putting into circulation data which analysed just parts of a superannuation but not the whole.

“By ignoring things like governance, advice, insurance and member servicing structures, consumers are not being provided with the whole picture,” he said.

Further he claimed that while conflicts of interest were identified as a major issue in superannuation during the Royal Commission, it seemed ironic that APRA had deliberately avoided reporting any measurement of a fund’s governance structure.

Bresnahan said that in an industry which carries inherently conflicted directors, “it would appear that governance had been ignored in favour of more easily assessable information” and questioned whether such omissions might create legal liabilities for APRA in the future.

The SuperRatings founder said APRA was entering unchartered territory and that it was not the first time the regulator had got it wrong, referencing APRA’s efforts to produce performance tables which were “flawed from a usefulness perspective, in that they don’t reflect the performance of a super fund’s investment options”.

“And so it continues with the heatmaps,” Bresnahan clamed. “Having reviewed the heatmap methodology, SuperRatings is of the opinion that their release into the public domain may create more questions than they answer and that consumers could well be influenced into products that are inappropriate for them.”




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Totally agree. It's incomplete and just causes confusion. It can't deal with Lifestage or other investment complications. Imagine if this flows through to a top 10 list outcome...

For too long SuperRatings has been using dubious research methodologies that favour union funds, then licensing those research results to union funds to use in their advertising! It's a complete scam, and it's great that APRA is providing an alternative perspective.

Let's face it, not one member of the general public will ever view the heatmaps anyway. People don't care enough about their super to complete and return beneficiary nomination forms, there's no way they are going to visit APRA's website, download a spreadsheet and try and decipher what all those pretty colours mean.

Anon makes a good point about Superratings.....it's a bit rich coming from an organisation like them who doesn't do any research of their own into underlying asset allocations, fees or performance, they basically just collate what the funds give them into nice tables. At least APRA's heatmap has correctly categorised the level of growth assets for the industry funds from what I can see e.g. Hostplus's Balanced option has a 93% allocation to growth assets in the heatmap spreadsheet. Superratings still allows them to be categorised as Balanced and compared against other options in the 61%-80% growth bracket because Hostplus tells them that they've decided to call some of their unlisted investments defensive.

Until the government legislates what is growth asset and what is defensive and then forces super funds to put their investment options in risk bands ranging from 1 (conservative) to 10 (high growth), no meaningful comparisons can be made.

Hmm. Ratings agencies whinging about completion from APRA. Damn shame.

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