‘Where were you?’ APRA taken to task on super expenditures
The Australian Prudential Regulation Authority (APRA) has been taken to task for having failed to enforce the sole purpose test amid allegations levelled against industry fund EISS Super over its sponsorship of sporting clubs.
However, the APRA has signalled that it will soon be releasing a report detailing where superannuation funds have fallen short on expenditures such as marketing and advertising meeting member best interest.
“Where were you?” the chairman of the House of Representatives Standing Committee on Economics, Tim Wilson asked. “You had the sole purpose test. Did it only become an issue when you got the member’s best interest test?”
APRA chairman, Wayne Byres sought to explain the regulator’s position in terms of it not necessarily having been aware of all expenditures by superannuation funds and said that the new member best interest duty had given it the ability to have greater visibility.
Byres said that APRA was looking at the facts of the expenditures undertaken by EISS and so he was wary of opining on something the regulator might take subsequent action on.
Wilson said he believed the issue “put to bed the lie that had been perpetuated since the Hayne Royal Commission that industry funds were all valorous and doing things in the best interests of their members.
“Most of them (expenditures) are an indulgence in seeking to use their members money to pursue their own interests,” he said. “What I want to know is, where was APRA? You had responsibility, there was a test and nothing was done.”
ASIC executive, Suzanne Smith said that the regulator had been looking at the issue since late last year and that she agreed with Wilson that such behaviour was “egregious”.
She said that while APRA did not comment on specific matters it was looking deeply at such behaviour across marketing, communications and advertising and it would be publishing a report which would show there had been some unacceptable behaviour.
“And we’re looking into that,” she said.
Smith said the best financial interest duty was important because it reversed the onus of proof necessitating that superannuation funds validate how their money is being spent.