Those helping super funds to manage their investment data report an industry groaning under the weight of more compliance than it has ever faced before.
Providers say the cost of increased workloads and systems build will be passed back to members, while opportunity costs are being incurred from the holding up of innovation.
DST Global Solutions, global head of asset servicing, Geoff Harries, says a tsunami of regulation was to blame.
“We would previously do an agenda with our clients to automate control, to innovate new products and services and regulatory compliance would be further down the list. It is now at the top.”
The holding up of innovation, he said, was leading to sub-optimal outcomes, while the cost of compliance was “going through the roof”.
The challenge for funds in 2014 is stark, said Nick Sherry, former superannuation minister and adviser to EY and to Citi.
“The detailed admin implementation issues and the operational issues are very significant. The level of requirement for reporting, data gathering, the admin to do that and new systems has grown markedly in the last year.”
Privately, APRA is known to have reservations about the complexity of some regulation and Sherry said that if it made its concerns known then the government would listen. Though, the drive for greater transparency to ensure a parity of reporting standards with other prudentially regulated entities had been led by APRA, he added.
One consequence of the compliance burden is organisational change at super funds.
Mark Neary, managing director – client relationships and business development – Asia Pacific at the Milestone Group, which provides fund processing and analytic solutions, sees funds being forced to adapt the way they run.
“This includes their governance, their client services processes, their operational processes and what this means to both their members and their partner organisations when measured in terms of cost, quality and efficiency,” he said.
Issues such as these are being discussed at the Investment Administration Conference being held at Doltone House in Sydney on February 12. The agenda can be viewed here.