The prudential regulator has indicated that it is examining the how trustees and superannuation boards justify their expenditure decisions in a new inquiry, with Industry Super Holdings’ ownership and funding of the New Daily up for scrutiny.
APRA is undertaking a broad review into trustee expenditure, considering arrangements across the superannuation industry.
In a letter to senator Andrew Bragg, APRA deputy chair Helen Rowell revealed the inquiry was taking place, in response to the backbencher’s queries around advertising spend and the Industry Super Holdings-backed media outfit, the New Daily.
“The review will consider the framework and decision-making process of boards pertaining to certain areas of expenditure, including a review of the metrics and approach to assessment of benefits to members,” Ms Rowell wrote.
APRA expects to have preliminary outcomes from the trustee expenditure review in March.
Mr Bragg, a former FSC (Financial Services Council) policy director and staunch critic of the industry super segment, commented that he was pleased the investigation was taking place, calling it “frankly overdue”.
The Liberal senator has previously accused the 27 industry super funds that own Industry Super Holdings of sinking workers’ retirement savings into a “propaganda outfit”.
He has also raised the question of the sole purpose test, which requires funds to invest members’ money solely for the purpose of maximising their benefits in retirement.
“The issue here is that the funds have created structures to move money out for non-retirement purposes, there’s structures to build up propaganda activity,” Mr Bragg told InvestorDaily.
“You want to see the laws enforced and you want to see that these so called investments are not part of the system going forward.”
The senator had issued APRA with a number of questions on notice regarding the New Daily in October.
Among others, one of the questions asked if APRA had been satisfied that industry super funds had applied the same level of rigour and analysis they would take for other investments, when seeding the media outfit with $12 million.
Ms Rowell, in her letter to Mr Bragg on Wednesday, said the regulator would be providing its responses to the questions on notice in the coming days.
The Senate also voted to see the details of a commercial arrangement between the New Daily and the ABC last week, requiring the public broadcaster to answer questions on notice about the matter.
The motion, moved at the request of Senator Bragg, also noted the New Daily “has been funded out of compulsory retirement savings arising from superannuation guarantee contributions” and super trustees should be complying with the sole purpose test.
The government’s draft Your Future, Your Super reforms have proposed public disclosure and tightened regulatory scrutiny around super funds’ expenditure and advertising spend, in the name of members’ best interests.
Trustees could face civil penalties under the framework, which could escalate to criminal punishments where intentions are deemed dishonest or fraudulent.
Industry Super Australia blasted the reforms on Monday, saying “sub-par” retail funds would be shielded from performance tests.
The industry body’s advertising spend, particularly for its $40 million “Our biggest project yet” TV campaign, has been previously criticised by Mr Bragg – with Ms Rowell signalling the campaign is the sort of arrangement APRA thinks deserves higher scrutiny.
Mr Bragg had previously raised the alarm on political donations from super funds, having written to APRA about Sunsuper’s payment to the Labor Party when it attended a breakfast event.
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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