Has APRA scrutiny constrained industry funds advertising?

Mike Taylor

Managing Editor and Publisher

28 April 2022

The Australian Prudential Regulation Authority (APRA) regards Industry Super Holdings (ISH) the business established by around 20 industry superannuation funds as being a $1.5 billion conglomerate in the same context as BHP, the Commonwealth Bank and Westfarmers.

What is more, the regulator wants the industry funds which have invested to Industry Super Holdings to justify that investment in the context of their members best financial interests.

Apart from the fact that superannuation has not emerged as a major election policy issue, the APRA position on Industry Super Holdings may explain why there has been little or no industry funds advertising during the Federal Election campaign so far.

APRA has pointed out that Industry Super Holdings is a non-APRA regulated, non-operating holding company that has four subsidiaries – IFM Investors (IFM), Industry Super Australia (ISA), Industry Fund Services (IFS) and The New Daily.

Industry Super Australia has traditionally acted as the coordinator of industry funds advertising campaigns.

APRA’s position has been revealed in answers delivered to questions on notice as part of the Senate Estimates process in relation to the fact that Industry Super Holdings is the owner of the New Daily publication which is seen by some Government parliamentarians as being a voice for trade unions and the Australian Labor Party (ALP).

In providing its answer, APRA said it agreed with legal opinion that the use of an interposed corporate entity of itself could not insulate a superannuation fund from ensuring that services provided to the fund were in the best financial interests of members.

The APRA answer said that the New Daily was originally funded with an investment of $12 million from ISH and five superannuation funds.

“This investment occurred in 2013, which is before the commencement of the best financial interests duty,” it said. “Approximately six years ago, the superannuation fund shareholders decided to discontinue their investment and ISH became the sole shareholder of The New Daily. This divestment also occurred before the commencement of the best financial interests duty.”

“APRA understands that the recent valuation of ISH is $1.3 billion, and The New Daily is valued at $4.4 million, 0.34 per cent of ISH’s value. Since becoming the sole shareholder of The New Daily, ISH has contributed an additional $16.4 million to The New Daily. This contribution occurred before the commencement of the best financial interests duty.”