APRA ‘no objections’ to compare the pair growth argument
Superannuation funds which argue that their advertising campaigns are based on achieving greater scale have received a positive message from the Australian Prudential Regulation Authority (APRA).
APRA has specifically stated in an answer to a question on notice as part of Senate Estimates late last year that it “does not object to the argument that advertising may bring in more members, thereby benefiting membership through efficiencies of scale”.
In fact, the regulator went so far as to state: “All things being equal, evidence suggests that larger funds are better placed to deliver stronger investment performance and lower fees. APRA does not object to the argument that advertising may bring in more members, thereby benefiting membership through efficiencies of scale”.
The regulator said that it was up to superannuation fund licensees to form a view on how they spent their money on particular marketing campaigns and this was not explicitly excluded because of the obligation to act in members’ best financial interests.
“The duty to act in the best financial interests does not make it unlawful to spend money on advertising (which could be characterised as an administration expense relating to the operation of a fund),” it said. “However, the amount of such expenditure and its perceived benefit is subject to best financial interests considerations.”
However, APRA said that it expected superannuation funds to be capable of sustaining their scale arguments and to be able to demonstrate how advertising decisions had delivered benefits to the membership overall.
It said this would need to be supported by a robust business plan and review over time of performance against the business plan.
Presumably this is the same reason regulators have allowed misleading and deceptive advertising by union (“Industry”) funds for years?
And we still wait to see these lower fees industry funds and APRA continue to refer to. APRA just keep on buying IFM’s BS.
The dummy at the bottom of the escalator may NOT be the dummy at all at payout time.
Let not forget that what they are doing is against laws of anti-competitive behavior. Last time I checked now that all these industry funds are open to all members they are now all competing against each other is Host plus vs Australian super yet they are allowed to pool money together like they are one super fund ACCC should shut this type of advertising. The Competition and Consumer Act 2010 bans business behaviours that damage competition
Anti-competitive practices are business or government practices that prevent or reduce competition in a market. Antitrust laws differ among state and federal laws to ensure businesses do not engage in competitive practices that harm other, usually smaller, businesses or consumers.
Fascinating that APRA have no problem with the millions spent by those same super funds on TV ads, Rugby Union team sponsorships, stadium naming rights…
Clearly it’s all in the members’ best interetsts…
I note that Australian Super has retrospectively increased fees.
Crickets from APRA.
Rugby league, AFL, and BBL is where the union super sports sponsorship money goes. In spite of it’s name, the rugby union community is not very receptive to entrusting unions with their retirement savings!
So did APRA actually ask these funds “to demonstrate how advertising decisions had delivered benefits to the membership overall.”??
Or do they just take their word for it?
I would have thought super stapling would reduce new memberships. Let’s see how much they spent, and how many new members were acquired so we can see how this fits the best financial interests requirements. Guess this also includes sponsorships.
In my view, the push for changes which lower detailed reporting on super trustees spending of members money only serves to raise more questions. Interesting given the continual claims of ‘transparency’ and ‘accountability’ by political types.
This area requires significantly greater ability to be scrutinised for accountability to be placed.
My personal confidence and opinion of the current system for checks and balances is very low.
They just took their word for it. I’m still waiting for my free seat at CBUS Stadium on the Gold Coast given I’m a member and the sponsorship is for my benefit.
Dear Mike – thankyou for this.
OK – so it’s not of itself unlawful for a super fund to use members’ money to advertise. But – maybe you need to extend your commentary to whether it’s lawful to use members’ money to make misleading claims in that advertising material. It’s clear that the regulator is blind to this. Perhaps an industry commentator could lift that veil on these dark-ages practices – even a little.