Super fund regulation harsher than for advice
There could be as few as 74 superannuation funds left in Australia by the end of the year as a result of fund mergers already underway and those likely to be generated by next week’s announcement of the second superannuation fund performance test results.
Of those remaining 74 funds, around a dozen will be counted as mega-funds with the two largest being AustralianSuper and the Australian Retirement Trust.
And there have been complaints by some superannuation fund executives that the superannuation sector is being even more harshly treated than financial planning.
One executive, who declined to be named, pointed out that while financial planning was regarded as having been tightly regulated by the Australian Securities and Investments Commission (ASIC), planning firms were not at risk of being forced out of the sector because they lacked scale.
“I can’t think of any other sector where a regulator can force such an outcome,” he said.
The latest Australian Prudential Regulation Authority (APRA) data reveals there are currently 95 MySuper products in the market and 88 licensees. At the same time there are at least 12 superannuation fund mergers in prospect 10 of which are acknowledged as being actively underway.
What is more, senior APRA executives have openly admitted that the regulator has actually “directed several trustees of underperforming funds to pursue a merger”.
When APRA announces the results of the second Your Future, Your Super (YFYS) performance test next week it is expected that as many as 10 products will be deemed to have failed, with two or three of those failing for a second time meaning they are precluded from accepting new members.
While the Assistant Treasurer, Stephen Jones has asked the Treasury to review the performance test, it
The degree to which the number of superannuation funds is shrinking was revealed earlier this year by APRA member, Margaret Cole, who acknowledged that while fund consolidation had been underway since at least 2013, it had sped up substantially in the last few.
“Of the 136 APRA-regulated super funds as at 31 December 2021, 96 funds have less than $10 billion in assets under management, and 63 of those have less than $2 billion,” she said.
While the Assistant Treasurer has announced the review of the performance test and the operation of the YFYS regime, he has backed the need for funds to be held accountable for their performance without expressing a view on funds being forced to exit on the basis of scale.
He obviously doesn’t know what it it is really like for a planner. And since when is a super fund a small business With the principals house on the line and the risk of having his/her licence stripped?? He’s just an employee for god’s sake.
What a drama Queen
How are they treated more harshly when they can admit to taking money from dead clients, overcharge clients, breach regulations by providing personal advice under the guise of general advice etc and they still get to keep their jobs and bonuses, while forcing their members to pay for any fines. This CEO needs to come out to the real world where regulators take away your livelihood for the most minor breach while super funds are a law to themselves in comparison.
So for over 30 years they have able to get clients from “regulatory capture”, without any requirement for “Needs Analysis”, strategy advice, alternative product comparisons, none of the crap advisers have to endure, yet they are more harshly treated?
They’ve had no need to waste members’ money on anti-adviser advertising, donations to unions, sponsoring football teams, greasing employers with holidays, parties etc, and only God knows what else…
Now they’re blaming the poor performance they’ve been achieving on lack of scale?
I wonder if any of them have actually considered that some of their past sins are finally starting to catch up with them?
I think I’ll start listening to them 10 years or so so down the track if there’s about a third of them left.
If this guy is worried he’s obviously not making the right donations. Advisers captured by Australian Consumer Laws,,,we can’t make misleading and deceptive statements around fees, performance using dates, valuations, or asset allocation yet Super funds when it comes to advertising can say anything. This guy is living in fairy land.