The Association of Superannuation Funds of Australia (ASFA) has outlined broad support for proposals in a Treasury consultation paper aimed at strengthening the Australian Prudential Regulation Authority’s (APRA’s) crisis management powers.
ASFA supported giving APRA greater directive powers with regards to registrable superannuation entity (RSE) licensees, a proposal Treasury said was aimed at giving APRA greater flexibility in terms of early intervention for RSEs.
However, ASFA expressed concern over one of the possible direction triggers, “promoting instability in the Australian financial system,” which it said was already sufficiently covered by new superannuation prudential standards.
“Our concern with this is that history has shown we only know which instruments cause financial instability in hindsight,” the ASFA paper stated.
This could give APRA the power to make broad sweeping bans on certain investment types or strategies, such as high frequency trading. Instead APRA should have broader powers to ban certain activities, to avoid giving less regulated players in the market an advantage over super funds, ASFA stated.
ASFA gave in-principle support of broadening APRA’s investigation powers to fraudulent conduct in relation to a ‘superannuation interest’ or ‘superannuation entity’. However, there need to be measures in place to prevent overlap between investigating parties, particularly where the Australian Securities and Investments Commission may be investigating the same contravention, AFSA stated.
ASFA also stated that while extending APRA’s disqualification, powers may not be warranted by actual cases of disqualified individuals taking up senior positions as investment managers or superannuation entities, the measure could only serve to enhance the integrity of the super system – on which basis ASFA supported the measure.
ASFA also supported APRA being able to extend disqualification in one industry across other industries but preferred that this be done via an application rather than automatically, which could create issues of natural justice.
ASFA supported a proposal allowing APRA to keep and publish a register of authorised entities, a measure that already applies to authorised deposit-taking institutions.
ASFA also supported proposals to: simplify obligations relating to investigation reports; ensure whistle blower protection; reduce the timeframes for entities to correct late, incorrect, incomplete or misleading data submissions; make it an offence to mislead actuaries; streamline the definition of a ‘disqualified person’; and give APRA discretionary power to appoint an acting trustee.
