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APRA won’t name and shame funds on super expenditures

Mike Taylor30 October 2024
Man with magnifying glass

The Australian Prudential Regulation Authority (APRA) will today publish its inaugural superannuation expenditure data but it has already declared it will not be ‘naming and shaming’ particular funds.

The data will show that total industry expenditure was $10.83 billion for the period, with investment-related expenses accounting for more than 33% of spending, advice for 11% and administration and other expenses for 53%.

APRA deputy chair, Margaret Cole said that while the regulator had contemplated publishing tables of the top 10 biggest spenders across categories it had ultimately decided against it,

“The main flaw with that idea was that it may be perceived as an exercise in “naming and shaming” trustees for levels and types of expenditure that might well be justified and appropriate,” she said.

“The scale of expenditure in a particular category is not necessarily a measure of whether the expenditure is good, bad or appropriate. Some very large items of expenditure may be justifiable as being in the best financial interests of members. Conversely, even relatively small items of expenditure might not be OK.”

“We also considered whether we should ‘blacklist’ certain types of expenditure, say, for example, advertising or payments to unions. Again, we decided against it,” Cole said.

However, she suggested that if something looks like duck, swims like a duck and quacks like a duck, then it is probably a duck.

“The measure of whether expenditure is appropriate under BFID [Best Financial Interests Duty] is not whether it passes the “pub test”, although trustees might well have good reason to take public opinion and reputational considerations into account,” Cole said. “The measure is whether trustees can demonstrate that the spend is in the best financial interests of its members. Having strong metrics that link spending to member benefit is an effective way of doing this.”

She said that APRA would be utilising the data to look for expenses where member benefit is not immediately evident or may not be reasonably justified.

“We will be prioritising expenditure where there is potential to improve practices and outcomes across the industry, or where we have market intelligence or where there is significant public interest.

“The areas we will target initially include – but are not limited to – discretionary expenditure categories such as travel, entertainment and conferences.

We will also focus on:

  • relative and absolute size outliers, including consideration of impact to members; and
  • particular types of payees and payments where benefit to members is not immediately apparent.

“Where deficiencies are identified, APRA will require that trustees make the necessary improvements, which may include APRA enforcing rectification measures where warranted. In line with our enforcement approach, APRA will typically make enforcement actions public.”

Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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Wildcat
6 hours ago

No future board positions for ex APRA employees??

Yet again one rule for union funds and one rule for the rest of us.

This structural regulatory bias is disguising.

Typical of a bureaucracy that has no credibility, no one trusts and is not fit for purpose itself.

REGULATORY CAPTURE CORRUPTION
6 hours ago

Regulators have no problem naming & shaming Advisers. Then fining and banning Advisers.
Yet the same Regulators won’t dare name & shame their Industry Super Fund / Union & Bikie Super Funds best buddies for their corporate sporting boxes, wines & dined.
No chance of any real look back for the past decade or so of Industry Super expenditure rorts.
No chance of any real look at the related party Union & Bikie bosses clipping squillions of $$$$ off Industry Super.
No chance of any fines or banning against Industry Super.
At every turn ASIC & APRA are found to be totally Regulatory Capture Corrupted with Industry Super.
Union & Bikie bosses rule $$$$$$$$$$

Researcher
4 hours ago

APRA (and ASIC) don’t even try to hide their bias anymore. Union funds can do whatever they want with members funds without any checks and balances and no fear of any penalty.

OhYeah
4 hours ago

APRA don’t mind calling out Westpac and the other banks for issues, even when they self-reported and fixed them. It’s similar to when industry fund executives got caught switching before they changed unit pricing during COVID, and APRA simply responded by saying they expect better governance.

This structural regulatory bias.

Super boss
3 hours ago
Reply to  OhYeah

No it’s a business expense. These super funds have to offer the right incentive to the right person. It’s just that Industry Super funds have had a lot of marketing expenses.

I would suggest Financial Advisers start doing the same, and paying ASIC officials money to speak at conferences. I see the FAAA have an ASIC speaker turning up at their annual conference. I hope they offered a complimentary flight upgrade with Qantas and a 5 day stop over in Fiji on her way up to Brisbane for her and her extended family. These are all legitimate marketing expenses. I believe that there are some CFMEU officials looking for work, perhaps Advisers could appoint them to their FAAA and get on board as to how things work in Australia.

dissappointed
3 hours ago

“APRA won’t name and shame funds on super expenditures”
It’s amazing what you can achieve when you pay consulting fees to public servants.