APRA is consulting on the prudential standard on Strategic Planning and Member Outcomes (SPS 515), following the passage of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No.1 Bill 2019) on April 04, 2019. The comment period for the proposed revisions to SPS 515 ends on May 29, 2019. Also, APRA proposes to maintain the commencement date of SPS 515 as January 01, 2020.
The Bill introduces a legislated outcomes assessment. APRA is proposing revisions to SPS 515 to clarify how the legislated outcomes assessment interacts with APRA requirements and to specify additional factors to be addressed in the assessment, as provided for in the legislation. The overall substance of the requirements for registrable superannuation entity (RSE) licensees in revised SPS 515 are unchanged, though the requirements are expressed differently to more clearly delineate the APRA requirements from those imposed by the Bill.
The revised SPS 515 requires a Business Performance Review (BPR) to be undertaken as part of an RSE licensee’s strategic and business planning process. This review reflects the same underlying objective as the requirements set out in the version of SPS 515 released in December 2018. That is, it requires an RSE licensee to be both reflective and forward-looking in identifying the improvements that can be made to enhance the sound and prudent management of its business operations and to drive the sustainable delivery of better outcomes for members. RSE licensees will be required to take into account the results of the legislated outcomes assessment as part of their BPR. The BPR requires an RSE licensee to analyze its performance in achieving its strategic objectives, having regard to its monitoring of its business plan, the outcomes achieved for different cohorts of members, and the results from the legislated outcomes assessment. The first BPR is required to be undertaken by December 31, 2020.
SPS 515 is also being amended to include requirements for the legislated outcomes assessment, as provided for under the Bill. RSE licensees will be required to:
- Document the methodology applied in undertaking the legislated outcomes assessment, including how the RSE licensee has determined “comparable choice products”
- Under section 52(11) of the Superannuation Industry (Supervision) Act 1993 (SIS Act), separately consider the impact of scale and the operating costs of its business operations on the financial interests of members that hold the product
Additionally, APRA published an information paper on post-implementation review of its superannuation prudential framework. In this post-implementation review, APRA examined whether the 2013 prudential framework for superannuation met its objectives in terms of improving practices of RSE licensees from those observed before 2013, resulted in any unintended consequences, and continues to remain fit for purpose going forward.
Comment Due Date: May 29, 2019
Effective Date: January 01, 2020 (Proposed)
Keywords: Asia Pacific, Australia, Insurance, Superannuation, SPS 515, Prudential Framework, APRA
Previous ArticlePRA Issues Systemic Risk Buffer Rates for Ring-Fenced Banks
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
The European Commission (EC) announced plans to defer the application of 13 regulatory technical standards under the Sustainable Finance Disclosure Regulation (2019/2088) by six months, from January 01, 2022 to July 01, 2022.
The European Insurance and Occupational Pensions Authority (EIOPA) proposed to amend the supervisory statement on supervision of run-off undertakings that are subject to Solvency II regulation.
The Bank of England (BoE) published a consultation paper on approach to setting minimum requirement for own funds and eligible liabilities (MREL), an operational guide on executing bail-in, and a statement from the Deputy Governor Dave Ramsden.
The European Banking Authority (EBA) is seeking preliminary input on standardization of the proportionality assessment methodology for credit institutions and investment firms.