Super trustees yet to address material gaps says APRA
The findings of an Australian Prudential Regulation Authority (APRA) review into superannuation trustees has determined they are still lacking in select areas to meet the investment governance prudential standard.
Commencing in December 2023, the review indicated that of the 23 in-scope trustees examined, representing around 80 per cent of total assets managed by APRA-regulated superannuation entities, 12 of them “require material improvements in either or both their valuation governance or liquidity risk management frameworks to meet the requirements of Prudential Standard SPS 530 Investment Governance (SPS 530)”.
The review followed in the wake of APRA adjusting SPS 530 in January 2023 to expand the requirements for super trustees related to valuations and liquidity management, as assets of APRA-regulated superannuation entities amounted to approximately $2.7 trillion as of 30 June 2024. Of this, $500 billion was invested in unlisted assets such as property, infrastructure, credit and equity.
The review determined that while trustee capability and approach have improved since APRA’s previous unlisted asset review in 2021, there were concerns regarding unlisted asset valuation governance, particularly in the areas of board oversight and conflict of interest management, revaluation frequency and triggers, valuation control, and fair value reporting; as well as liquidity risk management, particularly in the areas of liquidity stress trigger frameworks, unlisted asset liquidity risks and liquidity action plans.
APRA Deputy Chair, Margaret Cole, said the results of the review “highlight the need to further lift practices across the industry” and confirmed that the regulator will be communicating with the 12 trustees that were recognised in the review as requiring improvement and “will expect them to formulate appropriate and timely remediation plans”.
“Our superannuation system ranks among the largest globally and its performance has been improved by APRA’s efforts to eliminate underperforming funds, scrutinise trustees’ expenses and enhance asset valuation practices,” Cole said.
“These latest review findings are concerning and indicative of the fact that many trustees have more work to do to lift their valuation and liquidity risk management practices.
“APRA expects trustees to review these findings carefully and formulate appropriate remediation plans where needed. APRA will not hesitate to take further action where necessary to enforce the provisions of SPS 530 and related regulations, including the responsibilities of relevant accountable persons under the upcoming Financial Accountability Regime.”
“scrutinise trustees’ expenses and enhance asset valuation practices,” Cole said.
OK sure APRA,
So what Industry Super Fund Trustees have been Fined or Banned or publicly shamed for such poor practices that remain ongoing ?
Yep as we thought APRA, NONE
Industry Super Funds and APRA charge up drinks at the members paid for Sporting Boxes and laugh at any real regulation.
This implies that some super funds have been lets say giving out inaccurate valuations to thousands of their members. I wonder what ASIC’s reaction would be if they found an adviser gave just one client an inaccurate portfolio valuation?
How is this just?
Just announced APRA thry are fully aware industry funds are mispricing investments for millions of clients yet they are not doing anything about it??? we need a royal comission into our regulators and they have conflicts of interest no different was captured in the last Royal comission asking the banks if it was ok what they were saying in the media and asking them for their approval.
so Industry funds are running a ponzi scheme? only to benefit older members then, just the younger generation that will get screwed
I feel this is yet another example of two-tiered regulation.
Apropo of nothing in particular, I am told that the industry funds are shedding investment officers by the dozens.
Apparently it has something to do with the amalgamations of all the funds, that wonderful idea from that well-known financial expert, Commissioner Hayne