ASIC, APRA warn super platforms

The major investment platforms have flagged the possibility of expanded adviser monitoring frameworks as they seek reassure the regulators in the wake of the Shield and First Guardian collapses.

The reassurance came at the same time as the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) revealed the degree to which they have placed investment platforms on notice as a result of the Shield and First Guardian collapses.

The regulators confirmed they told the chief executives of the key investment platforms that they held concerns that the Shield and First Guardian collapses and their availability through some superannuation platforms “could weaken confidence in the superannuation system”.

Among the CEOs attending the roundtable held in late August were Netwealth’s Matt Heine, Diversa Trustee’s Andrew Peterson, Macquarie Investment Management’s Michelle Weber, Equity Trustees, Mick O’Brien and Avanteos Investments, Kely Power,.

APRA said it had reminded the trustees that the involvement of financial advisers in recommending platform choice products to members “does not absolve trustees from their obligations under s52 of the SIS Act and from compliance with APRA’s prudential requirements”.

Outlining what had been discussed at the roundtable, the regulators said some CEOs described using dashboards, analytics, and geographic mapping to identify anomalies such as mismatched adviser-member locations and disproportionate revenue growth.

“Monitoring triggers now include referral patterns, account openings, and unusual behaviours relating to flows at the investment option level, with some platforms conducting file reviews. Participants also committed to supporting members who, for various reasons, may no longer have a financial adviser,” the regulators’ summary of the roundtable said.

APRA challenged CEOs regarding the proliferation of platform products, reminding them of their gatekeeping responsibilities in determining the suitability of products made available to members.

CEOs supported enhanced line-of-sight and the real-time availability of information about MISs, including the role of related entities, portfolio investments, standardised due diligence documentation, and improved data sharing. CEOs noted these measures could support earlier risk detection and more sophisticated monitoring across the sector.

ASIC challenged participants to consider what recent actions they had undertaken to improve monitoring of advice fee deductions, and whether there are other products on platform menus that may lead to poor outcomes for members.

The industry attendees at the roundtable were: