APRA looks to deep dive on super funds unlisted assets
The Australian Prudential Regulation Authority (APRA) is proposing to demand more information from superannuation funds on their unlisted asset exposures.
The regulator has made its intentions clear as part of its data transformation project noting that with an increased focus on unlisted assets and valuations of those assets, it is proposing to collect the exposures of all directly-held investments in unlisted assets (with no materiality threshold) and their valuation information.
As well, APRA said it proposed to collect information on material unlisted investments held through unlisted investment vehicles, including special purpose vehicles and wholly vehicles.
“APRA seeks feedback on the proportionality of the proposed materiality threshold to the complexity of RSE licensee’s investment arrangements and the availability of valuations data for these investments on a look through basis,” the regulator’s discussion paper said.
“APRA seeks feedback on any asset classes and/or investment structures that would be challenging to report on a look through basis, and any alternative information the RSE licensee uses to address this challenge. APRA is open to applying a different materiality threshold in respect of indirectly held unlisted assets if it is helpful to industry. At a minimum APRA proposes that information on the value or proportion of assets revalued in the quarter would be reported. If the proposed data on valuation methodology is not available, RSE licensees may report ‘not available’.”
This is long overdue; people should have the right to expect that when they are allocating money to a superannuation fund, the true value is being used when the transaction is made.
In addition however, APRA should ensure the full fees for these unlisted assets are disclosed to investors.
APRA at their own pace and time, reminds me of a new employee with little experience, the discount rate applied commenced well over 1 year ago without much change to valuation, and the performance sprucing continues unabated, the maths should not be distorted , a pathetic sub scale reactive regulator with little or no accountability to deal with vested interests
“APRA is open to applying a different
materiality threshold in respect of indirectly held unlisted assets if it is helpful to industry”. (i.e, if it’s helpful to Industry Super)
“If the proposed data on valuation methodology is not available, RSE licensees may report ‘not available’.”
So APRA are going to ask Industry Super, what, how and when they want to report Unlisted Valuations and effectively let Industry Super report “not available” to keep cooking to books.
No doubt APRAs efforts will be useless and just a window dressing to say it’s been looked at.
REGULATORY CAPTURE CORRUPTION at its worse.
A welcome, albeit long overdue reform. Unlisted assets should be valued/repriced annually or, for example, if the commercial property market, office buildings etc moves by more than 5%.
APRA clearly don’t have the skill set to carry out the prudential regulation of the superannuation sector. Too focused on Banks and Credit Unions, we’ve seen Super funds allowed to operate without any regulation.
What we need is a Royal Commission into both ASIC and APRA. An investigation into the incompetence, the duplication and the clear corruption in the Australian Public Service.
Nothing to see here,
Hon Wayne Swam has confirmed today that CBUS ( and also other Industry Super Funds) have the only commercial property in the world that has not decreased in value by any amounts that all the rest of real value’s of the same asserts have.
It’s like a magic pudding that only ever grows in value.
Coincides with a stronger push from retail investment managers to allocate capital to this opaque area of the market… we can’t have everyone making up annual returns… If you cant beat them join them… so regulators are forced to start doing their job.
And I’m sure the regulators have no idea that by encouraging this move they’ve increased the risk exposure of the majority of everyday Australian’s super. It’s all fine in a long term bull market but when markets hit a prolonged downturn people will be shocked to see the result. It will be the next royal commission and the regulators and legislators will take no responsibility, in fact they’ll no doubt try to shift the blame to advisers.
The bigger risk will be what happens when a big industry fund suffers massive losses on unlisted assets. Will the Government step in to bail them out and cement the moral hazard in place for all time?
The unlisted asset value issue has been going on for YEARS !? Too little too late in my opinion.
In addition, what about asset allocations which don’t fit the label ? Since when does a balanced fund have circa 85% growth assets ?????