Industry funds advertising facing ongoing regulatory scrutiny

Superannuation funds may find their marketing expenditures the subject of ongoing regulatory review under proposals being considered by the Australian Prudential Regulation Authority (APRA).

Amid Parliamentary questioning about the high levels of particular industry fund advertising which occurred during the AFL and Rugby League finals series, APRA said it was considering an approach which would give a more “contemporary” view of those expenditures.

The questioning by former House of Representatives Economics Committee chairman and now assistant minister, Tim Wilson specifically referred to AFL grand final advertisements “run by Cbus at considerable cost” and whether they amounted to “the best financial interests of members”.

“We are considering what changes to our ongoing supervisory practices we may introduce to obtain a more contemporary view of RSE licensees’ practices and oversight in relation to expenditure on an ongoing basis,” the regulator said.

“This work is at an early stage and we have not yet determined a finalisation date for this.”

APRA also said that its review of the marketing expenditure of 12 superannuation licensees would be published shortly.

“Notwithstanding that this review covered expenditures undertaken in the period prior to the introduction of the best financial interests’ duty, we believe it will provide useful context and background as to industry practice,” it said.

Elsewhere in its answer to the House of Representatives Standing Committee on Economics, APRA said it believed the introduction of the best financial interests duty as part of the Your Future Your Super reforms represented a step change that necessitated superannuation funds reviewing their expenditure practices to determine they were consistent with the new duty.

“We have written to a number of RSE licensees to obtain information on aspects of their marketing expenditure; and whether and how they have considered the impact of the best financial interests’ duty on their expenditures.”

“We also intend to write to a larger group of RSE licensees to obtain information as to how RSE licensees have, more broadly, changed their approach in response to this reform e.g. revised polices, reviewed or ceased actual expenditure, changed their record keeping practices, etc. This will cover matters in relation to marketing expenditure of the kind referred to in the questions you have posed.”

“We are currently considering the scope of this information request and from which entities this information will be sought. At this time, we are unable to be precise as to the timing, other than to say that we intend to send the information request prior to the end of calendar 2021; and publish any broad observations in 2022. We would be happy to provide further information to the Committee once we have finalised our work.”