The prudential regulator has defended its powers after the royal commission questioned its preference for working “behind closed doors” and failure to take legal action against rogue funds.
The fifth round of the royal commission saw APRA deputy chair Helen Rowell grilled by counsel assisting Michael Hodge QC. Ms Rowell disagreed with Hodge’s suggestion that APRA works “behind closed doors” but admitted the that no corporate trustee has been required to give an enforceable undertaking in relation to superannuation in the last 10 years.
“The fact that no litigation was commenced does not mean that further remediation and proceedings are foreclosed,” APRA said in its submission. “APRA actively considered taking proceedings in the IOOF case.
“APRA accepts that there are legitimate questions as to whether a decision to litigate may achieve a result with wider deterrence effect as indicated in counsel assisting’s submissions. This issue will be the subject of further submissions by APRA on the policy and general questions posed by the commission following round 5.
“In APRA’s view, having the power to take litigation or other action is important to achieve the necessary changes and responses from entities without necessarily having to take that action in all cases. That is, the ‘threat’ of potential action facilitates the achievement of appropriate outcomes, which is APRA’s focus.”
APRA said the matter will be taken up further in its submissions on policy and general questions.
‘Fees for no service’
During her testimony on 17 August, Ms Rowell was asked whether APRA had received any suggestion from ASIC that ASIC will commence public enforcement action in relation to ‘fees for no service’.
“I don’t know the answer to that question,” Ms Rowell said.
In its submission, APRA agreed that charging fees for no service or charging fees to deceased members was “unacceptable”.
“However, what the most appropriate response is will depend on the context of the particular event,” APRA said.
“Where for example an RSE licensee itself identifies an instance of inappropriately charged fees, reports it promptly to APRA and engages with the relevant regulator (whether that be ASIC or APRA) in developing a remediation plan, APRA’s focus will properly be on whether the remediation plan is sufficient and whether the RSE licensee has systems in place designed to prevent future breaches.
“On the other hand, where RSE licensees do not promptly acknowledge and remedy issues, APRA can rely on the possible breaches of s 52 or s 62 to press the RSE licensee to take appropriate remedial and preventative action.”
APRA said the issue of ‘fees for no service’ impacts on the regulatory spheres of both ASIC and APRA.
“The ultimate causes of action for the misconduct identified may be different as between ASIC and APRA, but they will have the same factual substratum. APRA and ASIC share information and coordinate their activities in relation to the issue of fees for no service. APRA does not agree that it is incumbent on it to act earlier or separately from ASIC in such matters, when ASIC action may be achieving the common regulatory objective of appropriate remediation to affected members and/or where there may be other actions in train.”
Just one financial penalty has so far arisen out of the cases referred to ASIC following the royal commission, despite the regulator suggest...