APRA has welcomed the passage of legislation granting it stronger powers to take action against the trustees of underperforming superannuation funds. The Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No 1) Bill 2019 provides APRA with a broad and long sought-after directions power. It also gives APRA the power to take civil penalty action against trustees and their directors for breaching their obligations to members, including the duty to act in the best interests of members.
The new powers for APRA include those recommended by Commissioner Kenneth Hayne in the final report of the Royal Commission into misconduct in the banking, superannuation, and financial services industry. Deputy Chair Helen Rowell said the legislation significantly strengthened APRA’s ability to drive trustees toward improved outcomes for members and to address underperformance at an early stage. “In some instances, acting in the best interests of members will require underperforming funds to merge or exit the industry. If trustees and trustee directors are not willing or able to meet their best interests duties to members, they should be prepared to face serious consequences.”
The legislation also requires trustees to conduct an annual outcomes assessment against a series of prescribed benchmarks, including all of their MySuper and choice superannuation product options, and enhances APRA’s power to refuse, or to cancel, a MySuper authorization. The new outcomes assessment requirement is generally consistent with APRA's recently released member outcomes prudential standard and APRA is considering the extent to which the standard will need to be amended to accommodate the new legislation. APRA will provide guidance to industry on this as soon as possible.
APRA has also been granted new powers to refuse authority for a change in ownership or control of an Registrable Superannuation Entity (RSE) licensee; to give a direction to a person to relinquish control of an RSE licensee; and to remove or suspend an RSE licensee where it is subject to the control of its owner. The Bill also empowers APRA to collect data on expenses related to the management and operation of a fund on a look-through basis. This will enable APRA to better understand whether trustees are spending members’ money in line with their obligations under the Superannuation Industry (Supervision) Act 1993, particularly the best interests duty and sole purpose test.
- Press Release
- Treasury Laws Amendment Act 2019
- Treasury Laws Amendment (2019 Measures No. 1) Bill 2019
Keywords: Asia Pacific, Australia, Insurance, Superannuation, Prudential Framework, Treasury Laws Amendment Bill, APRA
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