APRA embeds acceleration of super funds consolidation in 22/23 agenda

There may have been a change of Government and the Australian Prudential Regulation Authority (APRA) may be soon farewelling its chair, Wayne Byers, but the regulator has embedded an agenda of accelerating a reduction in the number of superannuation funds in Australia.

Despite the Assistant Treasurer and Minister for Financial Services, Stephen Jones having ordered a Treasury Review of the Your Future, Your Super superannuation performance test methodology, APRA has made further superannuation industry consolidation a formal part of its corporate plan for 2022 – 23.

Under the heading of Strategic Priorities and Key Activities, APRA has stated one of its objectives as being: “Accelerate beneficial industry consolidation to establish viable and durable business models across the superannuation sector”.

APRA’s 2022-23 Corporate Plan has been signed off by current chairman, Byers, who is scheduled to part company with the regulator in October.

The superannuation priorities as listed by APRA as being to:

•  Continue to rectify sub-standard practices through robust supervision, strengthening prudential standards and reinforcing minimum expectations in regard to:

– fund expenditure including trustees’ practices as they relate to their ‘best financial interests duty’ (BFID) obligations;

– investment governance, successor fund transfers and financial resilience; and

– strategic planning and business performance review practices, insights and actions.

• Maintain momentum on eradicating unacceptable product performance by intensifying pressure on trustees to cease offering high-fee, poor performing products, and scrutinising choice products by:

– conducting annual legislated performance tests;

– continuing to publish MySuper and Choice heatmaps to support improved transparency, accountability and decision-making;

– heightened supervision of trustees of products that fail the performance test or otherwise demonstrate poor performance; and

– using prudential powers to take action against trustees where warranted.

• Accelerate beneficial industry consolidation to establish viable and durable business models across the superannuation sector.