The Australian Prudential Regulation Authority (APRA) has not ruled out naming the “worst in show superannuation funds” but stopped short of providing a date.

APRA deputy chair Helen Rowell told delegates at CMSF that the regulator won’t disclose which of the 28 underperforming funds were on this outlier list as publicity would be likely to hurt the financial interests of members.

“But I do stress ‘for now’ – we are actively developing ways to provide greater transparency around the outcomes individual funds and products are delivering their members, thereby making performance clearer to all.”
Rowell said the banking royal commission had identified areas where APRA must clearly do better – especially in relation to ensuring trustees are held to account for failing to meet their obligations to members.

The deputy chair said the royal commission has made clear that it’s not enough for APRA to only act behind the scenes; the public needs to have greater confidence that action is being taken to hold trustees and directors to account and to address underperformance and poor outcomes.

“We will therefore start providing, to the extent feasible, more information on the steps we are taking to ensure trustees address weaknesses and rectify breaches, including instances of formal enforcement action.”

She called it a pity that the Members Outcome Bill – which beefed up APRA’s power and gave it the ability to take civil penalty action for breaches of obligations to members – has not yet passed the Parliament, as   “our ability to compel action is more is more limited than we would like”.

Rowell also indicated that trustees would soon be receiving a letter from APRA outlining the regulator’s tough new expectations that trustees are held to account for failing to meet their obligations to members.

“To that end, you can expect to see a more assertive APRA that pushes harder for trustees to fix problems more quickly, is less patient with inadequate responses or inaction, and more willing to make an example of uncooperative trustees and directors.”

Earlier, on a panel discussion, former Australian Competition and Consumer Commission (ACCC) chairman, Alan Fels and AustralianSuper chief Ian Silk argued the royal commission should have gone longer and looked more deeply at policy.

Fels described it as a “lawyer’s royal commission” which delivered a lawyers report.

“It had a somewhat narrow terms of reference – it was about misconduct and what you– immediately do about misconduct which is not really a policy.”

Fels compared the royal commission report unfavourably with the Productivity Commission report which was all about policy and broader aspects of the environment.

“I wold have preferred the royal commission to dig in more deeply on fundamental issues.

“Hayne took a relatively conservative approach and relied very heavily on regulation and change culture to fix the situation and put things right,” he said.

The former ACCC chair said the royal commissioner had said that responsibility lay at the top level of financial institutions but had then failed to go deeply into them.

“There were no deep structural changes proposed or addressed,” he argued. “For example, the question of vertical integration.”

“Other structural questions also needed to be much more deeply addressed,” he said. “There was not a great deal on remuneration and conflicted remuneration – these are difficult issues which need to be pursued more deeply.”

Despite the strong condemnation he went on to say the commission took a conservative approach that relied on current regulation and beefing up the culture to put things right.

“Neither was there a great deal on the difficulties of remuneration and the conflicted remuneration schemes – there were some recommendation but they were not very comprehensive.

“They’re difficult issues and need to be pursued more deeply- there was very little on the difficulties of the remediation schemes.

Australian Super’s chief executive, Ian Silk, weighed in saying it wasn’t only for-profit funds that had practice issues.

“I look around the super sector and the problems aren’t all in the retail sector,” Silk said.

“There’s a bit of a view that a Labor Government would be the salvage of industry funds,” Silk said. “That’s not true.” Rather, he felt that a Shorten Government would adopt a “pro-member mindset” and industry funds would have to meet that, as would retail funds.

Australian Institute of Superannuation Trustees (AIST] chief executive Eva Scheerlinck, raised some questions about the royal commission’s overall findings. She called the final report “an anti-climax”, after the media hype.

She told conference goers that she had expected headlines for prosecutions and further investigations.

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Elizabeth Fry has been a financial journalist for more than 25 years and has written for a number of publications, including CFO, The Financial Times and The Australian Financial Review.
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