Don’t bury us in red tape – super funds urge APRA

Mike Taylor

Managing Editor/Publisher, Financial Newswire

19 December 2022

Superannuation funds have sent a clear message to the Australian Prudential Regulation Authority (APRA) that it risks overloading them with expensive and time-consuming regulatory obligations in 2023.

The views of the superannuation funds have been reflected in a submission filed with APRA by the Association of Superannuation Funds of Australia (ASFA) responding to consultations around two new draft prudential guides – one dealing with Financial Contingency Planning and the other dealing with Resolution Planning.

And the clear message from the superannuation funds conveyed via ASFA is that while they are happy to support good governance of superannuation funds they are not too happy about the level of time, work and money involved.

“ASFA member organisations have provided feedback that it has proven difficult to provide comments on the Draft Guides, particularly Draft CPG 900, as this is a new area of prudential supervision and Draft CPS 900 has not been finalised,” the ASFA response said. “This is especially the case as it is a cross-industry prudential guide, not superannuation specific, and accordingly it is more difficult to analyse and assess in detail.”

“Member organisations have observed that there is likely to be a lot of learning in this area over the next few years and that not all of the implications of the Draft Guides will be fully identified, appreciated or understood until after discussions between superannuation entities and APRA have taken place,” it said.

“It was also observed that there are considerable interdependencies with the consultation on the Discussion Paper on ‘Strengthening financial resilience in superannuation’ (Discussion Paper), which includes the proposal to replace Prudential Standard SPS 114 Operational Risk Financial Requirement with enhanced obligations for trustees. Member organisations have suggested that it is difficult for them to consider all the implications of Draft CPG 190 and Draft CPG 900 prior to the finalisation of the consultation on the Discussion Paper.”

“Finally, member organisations have assessed the work necessary to comply with the proposed new obligations under Draft CPG 190 and Draft CPG 900 is considerable, including performing comprehensive reviews of trustee and fund policies and of the trust deed and other governing rules. Given this, member organisations have asked that APRA is cognizant of the volume of work involved in trustees performing the various reviews of governance documentation, policies and processes, and in effecting the necessary amendments and approvals, expected of them during 2023 and 2024.”