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Superannuation fund directors must be more diligent in disclosing their potential or actual conflicts of interest, the prudential regulator has warned.

Speaking at the Association of Superannuation Funds of Australia (ASFA) conference in Perth yesterday, APRA member Helen Rowell highlighted the interrelationships between board members and external service providers.

“Increasingly, there are linkages between trustee directors and funds and the providers of services such as administration, advice and investments,” she said.

Board members must consider how those 'linkages' could – or could be perceived to – represent a conflict of interest, said Ms Rowell.

“They also need to consider how such relationships are managed and reported," she said.

“Are arms-length contractual arrangements in place? And is the return in value to members being reflected in the fees being paid and the charges to members, and the value placed on the investments in the fund?” asked Ms Rowell.

APRA will be conducting a number of “thematic reviews” across the superannuation industry over the next 12 to 24 months to assess how funds are complying with the Stronger Super regulations, she said.

“Most in the industry have put in place the policies and frameworks required under the APRA standards, but in our view there is more work to be done to imbed and implement them,” said Ms Rowell.

More work needs to be carried out in a number of areas, including risk appetite, risk management, investments, insurances and stress testing, she said.

When it comes to MySuper, the number of successful applications hit 100 last week, according to Ms Rowell – which is well below what the regulator expected.

“There have actually been some [trustees] taking a long hard look at whether they want to be in this business or not,” she said.

The fact there are only 100 successful MySuper applicants so far – the regulator is expecting 125 by the 1 January 2014 start date – means the industry “is left with a better pool of [funds] than we perhaps may otherwise have been”, said Ms Rowell.

 

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