APRA identifies super fund expenditure shortcomings
The Australian Prudential Regulation Authority has identified weaknesses in superannuation funds expenditures and putting members interests first including a lack of rigour entering into agreements and a lack of robust governance and oversight.
In a letter to superannuation funds following intensified scrutiny of fund-level expenditure particularly focused on 14 superannuation funds, the regulator has set out its expectations and what it sees as better practice.
It listed areas for improvement as including lack of rigour when entering into agreements, decisions to proceed with contracted expenditure without demonstrating a clear rationale and looking at the activities of peers rather than delivering outcomes to members.
While APRA’s scrutiny of the 14 superannuation funds identified areas for improvement, APRA did not specify which funds needed to make improvements or why.
It said that it had communicated directly with the funds and would continue to monitor them as part of ongoing supervision.
The regulator’s letter outlined its high level expectations of funds as including:
- A robust decision-making approach with clear links to Strategic Objectives and expected financial outcomes for members (e.g. estimated dollar value benefit or saving);
- A comprehensive expenditure management framework with clear definitions and expectations, thresholds and approval requirements inclusive of a risk assessment;
- Periodic monitoring that utilises member outcomes focused success metrics to measure improved or declined financial outcomes to members, and acting on insights further to these metrics; and
- Reporting that is supported by evidence and data with clear links to member impact.
Name and Shame the Industry Super Funds with expenditure problems = No way says APRA.
APRA and ISF discussed it over ISF member paid for food and drinks at the ISF sponsored MCG sporting box.
APRA said, let’s make some noise about this, we won’t follow up, no name and shame and then all sweet.
Let’s drink to that said ISF, APRA and ASIC too, ISF members shouting again !!! huh huh huh.
Where’s the retrospective analysis and compensation to members?
if an adviser had taken money from a client account inappropriately – what would the reaction be?
If I used the word ‘two-tiered’ to describe our system, would anyone disagree?
If so, please make an argument. I’d really like to hear it.