The prudential watchdog has outlined its targets across the superannuation industry during the next four years, with plans to cull underperforming funds and to scrutinise aspects such as trustee governance, outsourcing and unlisted asset valuations.
APRA has updated its corporate plan to respond to the impacts of COVID-19, prioritising financial stability and the soundness of regulated entities, through focusing on operational resilience and contingency planning for adverse events.
The corporate plan has also included APRA’s steps for how it will achieve its objective of driving a “superannuation trustee culture of continuous improvement, including addressing underperformance in the superannuation industry”.
APRA has promised it will facilitate the resolution or exit of “persistently underperforming superannuation funds” by using data-driven insights and supervision.
The regulator’s deputy chair Helen Rowell last week revealed the body expects that COVID will exacerbate pre-existing pressures for funds. Speaking on sustainability, Ms Rowell told the Stockbrokers and Financial Advisers Association virtual conference that the industry is still “extremely diverse” and it has a “way to go” before the players are of sufficient size, scale and capability.
At the same time, APRA is chasing more information from the funds for its Superannuation Data Transformation project – with plans to include choice products and options in an expanded version of its heatmap.
The corporate plan has also stated the regulator is set to “sharpen its supervisory focus to address key issues relating to outsourcing and conflicts of interest, trustee board capabilities and governance and unlisted asset valuations”.
It will be conducting assessments across the factors, giving a rough June/July 2022 deadline for an implementation plan for the review of trustee boards and unlisted asset valuations, as well as the completion of a review on outsourcing.
The regulator had delayed a range of its monitoring and regulatory initiatives when the crisis first kicked off, with the aim to help financial institutions navigate the difficult environment.
APRA has now indicated it will continue its work in three of its four key areas focus with a longer-term purview over the next four years. The longer-term focuses are its aims of improving super member outcomes, transforming governance, culture, remuneration and accountability across industry and improving cyber resilience.
APRA chair Wayne Byres said the updated corporate plan has responded to COVID with a reallocation of resources.
“APRA has been flexible and responsive to the rapidly changing environment. It has meant that many aspects of last year’s plan have had to be adjusted to ensure APRA is able to dedicate increased resources towards the critical objective of maintaining the resilience of the financial system, in order to maintain public confidence and support the recovery process,” Mr Byres said.
“Given the highly uncertain environment, APRA will continue to monitor the risks and potential vulnerabilities in the financial system, and adjust its plans accordingly.”
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
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