Addressing the Conference of Major Superannuation Funds on Wednesday, APRA deputy chair Helen Rowell said the prudential regulator was currently conducting a review of trustee promotional spending and how this was contributing to member outcomes.
“It is important that regulators continue to ensure the multi-trillion-dollar pool of super money is being invested appropriately, in ways that advance the best interests of members, and hold trustees to account to ensure they are doing so,” Ms Rowell said.
“Hence the increased scrutiny APRA has been applying to trustee expenditure by enhancing Prudential Standard SPS 515 [on] strategic planning and member outcomes, and requiring more granular expense data as part of the superannuation data transformation program.
“At the sharp end of this work is the current thematic review focused on trustee promotional expenditure. The review’s objective is to better understand how trustees demonstrate the value that is being delivered to members when they decide to make these expenditures, and the metrics that trustees use to measure success.”
Ms Rowell said the probe was examining the promotional spending patterns of over 20 funds, which APRA had asked to provide “information and supporting analysis on different types of expenditure, including advertising campaigns, television program sponsorship, sponsorships of sporting teams and payments to external organisations”.
“We expect to conclude this thematic work in the next few months and, if we form the view that some expenditure is contrary to the best interests of members or the sole purpose test, enforcement action will follow,” she said.
The comments come following harsh criticism from Liberal backbenchers Andrew Bragg and Tim Wilson around industry funds’ rising marketing, advertising and sponsorship expenditure, with Senator Bragg remarking last year that the funds’ tie-up with news outlet The New Daily amounted to a propaganda mouthpiece for the industry fund sector.
Mr Wilson – who chairs the House economics committee – has also interrogated funds around their contributions to the advocacy group Industry Super Australia, which conducts national advertising campaigns on behalf of the funds that are often critical of the retail super sector and the government.
Ms Rowell, who will relinquish her responsibilities over the super sector later this year to move to the insurance portfolio, said Australians were “generally well served by their super funds” and member outcomes continued to improve, but trustees that were unable to meet more exacting public standards as the industry matured would “find their days are numbered”.
“Meeting those rising standards hinges on something that can’t be calculated or presented in a spreadsheet: a mindset where members’ best interests always lie at the heart of trustee decision-making,” she said.
“For all the industry’s progress, I don’t think we’re completely there yet. We hear a lot of trustees talk about putting members’ interests first but the evidence to support that is often not as easy to point to as it should be.”