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APRA hints trustees in hot water

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APRA is currently reviewing whether it should take enforcement action against eight superannuation trustees for failing in their obligations to members, as it has released its 2020 report card for the industry. 

The prudential regulator has released the first full refresh of its heatmap since it was first published last December, publishing data that compares super funds across metrics such as net investment performance and fees. 

The 2020 heatmap also has an accompanying report, which has shown in the last 12 months, 11 of the MySuper products that underperformed the investment benchmarks in the first heatmap have exited the industry.

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But eight trustees are now under review for possible breaches of the Superannuation Industry (Supervision) Act 1993 (SIS ACT), in relation to ten MySuper products.

APRA has said it will be issuing notices in coming days requiring the trustees to provide information around the underperformance of some of their products and the actions being taken to address their lagging.

 The trustees’ answers will be used to determine what further action APRA will take, including potential use of formal enforcement powers. 

According to APRA, following the first heatmap, the majority, 71 per cent, of MySuper members (around 10 million people) are now paying less in total fees and costs, as funds have cut back an estimated $408 million in costs.

APRA deputy chair Helen Rowell said the heatmap had shown its value in holding trustees publicly accountable for the performance of their products and member outcomes.

“The MySuper product heatmap shines a light on those trustees who are failing their members by charging high fees and not delivering good long-run returns,” Ms Rowell said.

“The impact has been immediate in the area of fees and costs, with MySuper members savings hundreds of millions of dollars in fees since the release of the first heatmap. And despite an immensely challenging year with COVID-19, more than half of MySuper products exceeded our investment benchmarks over six years.”

But the regulator has expressed concern that some funds have remained the poorest performers 12 months on.

 

APRA hints trustees in hot water
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Sarah Simpkins

Sarah Simpkins

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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