ASFA and JANA deliver super IM guidance

The Association of Superannuation Funds of Australia (ASFA) has leveraged its relationship with investment consultancy JANA to produce draft guidance for superannuation funds in meeting their investment management regulatory obligations.

The release of the draft guidance follows on from ASFA and JANA announcing in November, last year, that they were partnering to lead an industry-wide effort to enhance and replace the existing guidance on investment management operational due diligence in preparation for APRA’s new prudential standard CPS 230 Operational Risk Management Standard, which comes into effect on 1 July.

The release of the draft guidance places ASFA alongside the Financial Services Council (FSC) in adopting a guidance/standards setting role.

However, the guidance note itself makes clear that it is not intended to repeat or duplicate relevant legislation and “does not attempt to align or link practices” to particular obligations”.

But, putting context around the guidance, ASFA noted that all RSE licensees are required by superannuation law to exercise care, skill and diligence in connection with their roles, then stated: “The ODD guidance outlined in this GN would assist with demonstrating that care, skill and diligence has been exercised, noting that the requirements of that duty are broader than initial and ongoing due diligence”.

“Certain APRA Prudential Standards such as CPS 230 and CPS 234 (which are explained further below) impose additional requirements in connection with material service providers engaged by RSE licensees and these requirements will potentially apply to investment managers, as well as to other entities that manage information assets of RSE licensees. Aspects of the guidance within this GN will assist with demonstrating compliance with these requirements, noting that these prudential

standards also require steps to be taken outside of the ongoing due diligence context.”

“As such, it is important to understand that this GN is not merely about compliance with CPS 230 and CPS 234, and compliance with those prudential standards requires action that is beyond the scope of this GN.

Commenting on the release of the guidance, ASFA chief executive, Mary Delahunty the updated guidance provides a clear road map for superannuation funds and investment managers to meet the evolving regulatory landscape.