APRA has announced that it will watch super funds more closely and has not ruled out naming and shaming underperforming funds.
APRA’s deputy chair Helen Rowell said that super funds had to become more transparent and that APRA was considering ways to identify funds which had not performed.
“For now, we don’t intend to disclose which funds make this outlier list, recognising that being effectively labelled among the “worst-in-show” is likely to hurt the financial interests of members,” she said.
However, Ms Rowell did not rule out doing it in the future as the prudential regulator seeks to act outside of the dark.
“I do stress ‘for now’ – we are actively developing ways to provide greater transparency around the outcomes individual funds and products are delivering their members, thereby making performance clearer to all,” she said.
Ms Rowell said that APRA could not disclose every action they take but understood that the public needed greater confidence in the industry.
“The public needs to have greater confidence that action is being taken to hold trustees and directors to account and to address underperformance and poor outcomes.
“We will therefore start providing, to the extent feasible, more information on the steps we are taking to ensure trustees address weaknesses and rectify breaches, including instances of formal enforcement action,” she said.
As part of that effort, APRA was undertaking a major review of the superannuation data reporting review, said Ms Rowell.
“This review aims to provide greater coverage, enhanced consistency and better quality data through clarifying and revising definitions, and increased granularity in some areas, such as expenses,” she said.
It was this data that would identify the aforementioned outlier funds that underperformed. Ms Rowell said APRA would work with those funds to improve their performance.
“The trustees of these funds will be targeted with intensified supervision, with APRA seeking prompt action to address areas of weakness or concern,” said Ms Rowell.
The deputy chair said that the public would see fund performance at a more granular level as trustees started to provide the authority with their member outcome assessments.
“Our challenge is to collect and present superannuation data in a way that can be understood by a broad audience and yet also allows for meaningful comparisons between funds and products,” she said.
Ms Rowell said generalisations about the industry did not help and what was needed was a more individual approach.
“What’s needed is to go beyond sweeping generalisations by developing greater credibility, consistency and clarity of performance information – not only at an industry or sector-wide level, but at an individual fund and product level,” she said.
Ultimately APRA was opening the door to make the industry more transparent said Ms Rowell and trustees only had one simple consideration to make.
“Trustees’ fundamental consideration is a simple one: am I acting in the best interests of my members at all times?
“As APRA opens the door to more transparency on superannuation performance and member outcomes, the answer to that question will become increasingly clear to everyone,” she said.
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