APRA is concerned superannuation trustees are approaching the improvement of member outcomes as a “box-ticking exercise” and suggested they were being “unambitious”.
Prudential Standard SPS 515 revolves around improving member outcomes and strategic businesses planning, which APRA deputy chair Helen Rowell says “speaks to APRA’s expectation that trustees should manage their operations like the significant (in many cases multibillion-dollar) financial services businesses they are.”
But Ms Rowell believes trustees have been falling behind on their obligations and approaching SPS 515 as a “tick-a-box compliance exercise”
“Despite the intense scrutiny the industry is under at present, and APRA’s past and ongoing engagement with industry and individual entities on the need to address underperformance, not every trustee appears to have embraced these requirements with equal gusto,” Ms Rowell said.
A recent benchmarking exercise to gain insights into better practices across the industry found that practices “varied wildly”.
“The trial outcomes assessments for MySuper products were generally simpler and better structured than for choice products,” Ms Rowell said.
“The latter were broadly not done well. For example, some trustees did not document their methodology for determining how members’ financial interests are being promoted for each of their choice products, having regard to the factors set out in the legislation.”
Some trustees also set “questionable” benchmarks, including not having top quartile fees, which Ms Rowell suggested was a “very unambitious goal”.
“Another area where some trustees came up short concerned their treatment of the various factors they are required to consider as part of the outcomes assessment,” Ms Rowell said.
“Some of these factors appeared to either have not been considered, or the assessment was inadequate.”
Ms Rowell warned trustees to expect more engagement from APRA on the matter.
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