APRA continues unlisted assets super scrutiny
Just days after making public the need for major industry superannuation fund HESTA to refund money to members over the repricing of unlisted assets, the Australian Prudential Regulation Authority (APRA) has flagged the imminent release of the results of a deep dive into area.
At the same time as suggesting that the superannuation industry is currently “under intense scrutiny”, APRA executive director, Carmen Beverley-Smith has told superannuation fund executives that the regulator continues to see room for improvement.
“The way funds are run, how investment and expenditure are governed, how liquidity is managed, how funds perform, and how well members’ needs are understood and met, all have an impact on the financial outcomes of members in retirement,” she said. “But APRA continues to see significant room for improvement across many of these areas.”
Beverley-Smith told the ASFA conference that APRA is keenly focused on trustees’ approach to investment governance and how trustees are meeting the updated requirements that came into effect in January, last year.
“A survey conducted last November identified continuing issues with unlisted asset valuations. These included a lack of clear revaluation triggers by some trustees, while in other cases the valuations of certain unlisted assets, such as private equity and credit, property and infrastructure, were not occurring on a quarterly basis as per our guidance,” she said.
“We are now closing out a deep dive review of asset valuation and liquidity management practices for a cross section of large and mid-size trustees with material exposure to unlisted assets, which will provide much deeper insights in these areas. We expect to share those findings soon.”
Beverley-Smith also referenced APRA’s scrutiny of superannuation fund trustee expenditures and said that where particular expenditure was reviewed funds would need to demonstrate why the expense was in the best financial interests of members.
“You will need to identify what those member benefits are and evolve the necessary metrics to assess the outcomes for members,” she said.
APRA’s wet lettuce leaf of Regulatory taps on the wrists for Industry Super.
All washed down with plenty of grog and food at the conference and discussion of the next sports corporate box event, Cricket season….said Industry Super.
Every single union fund will fail APRAs guidance on the valuation approach for their significant holdings of unlisted assets. Yet it is guaranteed that APRA will do absolutely nothing about it, other than asking nicely for the funds to improve, which they will ignore.
It is time for super funds to be regulated to higher standard.
It appears ridiculous that one could argue that a $7 billion ASX listed investment company is subjected to considerably greater scrutiny and transparency than a $200+billion super fund.