Super funds must “rise to the challenge” of their greater size and complexity or face the consequences, according to APRA deputy chair Helen Rowell.
Speaking to the Association of Superannuation Funds of Australia (ASFA) annual conference, Ms Rowell warned that as the industry “continues to evolve and mature” it will also need to lift its game to ensure member outcomes are prioritised.
“…practices and approaches that may have been acceptable in the past need to evolve and mature to reflect the needs of a larger and much more complex superannuation industry. To the extent there are welcome signs of increased member engagement, you also need to rise to the challenge of more demanding members,” Ms Rowell said.
“APRA will continue to highlight those funds that are not operating at the expected level and I reiterate the message for those in the industry still lagging behind that, if you’re not up to scratch, you need to get better or get out.”
Ms Rowell expects a continuation of the industry’s rapid growth and consolidation, noting that only six years ago there were no funds with more than $100 billion AUM and now there are three, “with more to come”. That increased size and complexity mean APRA will also be stepping up its game, with Ms Rowell warning funds that new underperformance benchmarks would quickly separate winners from losers.
“APRA’s commitment to ensuring that unacceptable performance is rectified is unwavering. For those trustees that have products that are persistently underperforming in any of these areas, they will experience intensified supervisory activity including the expectation the trustee has a plan to rapidly improve outcomes for members or close the product,” Ms Rowell said.
“Much has been achieved by the industry, and that should be acknowledged. But so too should the reality that many boards will need to make changes to achieve the standards and performance that APRA requires and the community expects.”
One of the peak superannuation bodies has claimed that industry funds have “significantly outperformed” their retail counterparts and ca...