APRA confirms how super funds pay ASIC fines
Superannuation funds which use member reserves to pay penalties or fines imposed by the Australian Securities and Investments Commission (ASIC) will not fall foul of the Australian Prudential Regulation Authority (APRA).
In fact, APRA has admitted that while it is aware of superannuation funds incurring ASIC penalties it does not actually collect information on how those penalties have been paid.
APRA had been directly asked via Senate Estimates whether the payment of fines levied by ASIC with superannuation fund members’ money is compliant with the best financial interest duty.
The question was raised by NSW Liberal Senator, Andrew Bragg who referenced the payment of an ASIC fine by Australia’s largest superannuation fund, AustralianSuper, by drawing from its Trustee Risk Reserve.
Bragg noted that the Trustee Risk Reserve was funded by AustralianSuper’s Administrative Reserve that is ultimately financed by members.
However, APRA made clear that this did not represent an issue.
“Any decision by a trustee to exercise a fee charging or remuneration power for the purpose of building a reserve to pay fines and penalties is a matter for trustees,” APRA’s formal answer said. “These decisions must be consistent with a trustee’s duties and obligations, including the best financial interests duty.”
“In various applications, numerous state Supreme Courts have recognised that the creation of such reserves was to avoid the risk of the trustee becoming insolvent and the detriment to members from a trustee insolvency event, and this risk was seen as not in the best financial interests of members.”
On the question of other funds using members’ funds to pay fines, APRA said it was aware of other superannuation trustees receiving penalties however APRA does not collect information on how penalties have been paid.
In 2018 APRA initiated action against IOOF (now Insignia) for its use of its superannuation fund operational risk reserve to compensate members who had lost money due to administrative shortcomings.
The Federal Court found against APRA in the case and the regulator did not contest the decision.
What a joke, APRA & ASIC are corrupt union lapdogs.
REGULATORY CAPTURE CORRUPTION at its worst, ASIC & APRA to All Industry Super.
So one Super fund has to pay fines from the revenue of its parent (for profit) company, and the other gets to dip into member accounts to pay the fine. Would this not lead to some bias when they are being regulated? It’s obvious the fund that can pay the fines, without impacting member accounts, would be likely to attract harsher penalties.
Another great example of Regulatory Capture Corruption.
“APRA does not collect information on how penalties have been paid”.
Of course APRA would turn a blind eye to anything Industry Super do that is dodgy.
So when IOOF did it, APRA took them to court and caused all sorts of ruckus, which APRA then lost.
But now its ok?