August 11, 2017

APRA released a letter outlining proposed changes to the superannuation prudential framework to lift operational governance practices of APRA-regulated superannuation trustees (RSE licensees). APRA intends to implement these via changes to prudential standards and guidance, which will be the subject of further consultation in due course. APRA invites feedback from RSE licensees and other interested stakeholders on the proposals set out in the letter and requests feedback by September 11, 2017.

The term “operational governance” relates to how an RSE licensee determines its strategic objectives, undertakes business planning, and runs its business operations on a day-to-day basis. While many RSE licensees have embedded sound operational governance practices throughout their business operations, APRA’s supervision has identified weaknesses in practices of some RSE licensees. APRA will consult over the coming months on proposed changes to the prudential framework, including:

Requiring RSE licensees to have an operational governance framework, which covers the policies and processes that support strategic and business planning, and ensure rigor in operational decisions, particularly those related to expenditure and reserving

Expanding the existing business planning requirements to ensure RSE licensees appropriately implement, monitor and review their business plans in the context of clear strategic objectives

Requiring RSE licensees to meet minimum expectations when making decisions on fund expenditure, with a view to ensuring there is adequate rigor in decision-making, monitoring and transparency related to the use of members’ money

Requiring RSE licensees to undertake an outcomes assessment for all members. APRA expects to provide guidance to support this assessment, including the proposed MySuper outcomes assessment

 

A detailed package of draft standards and prudential guidance will be published for further consultation in late 2017. 

 

Related Link: Letter to RSE Licensees (PDF)

Comment Due Date: September 11, 2017

Keywords: Asia Pacific, Australia, Banking, Securities, Insurance, Operational Governance, RSE Licensee, APRA