APRA prosecutes super fund defaulters

The Australian Prudential Regulation Authority (APRA) today advised that it will be referring 21 cases to the Director of Public Prosecutions (DPP) for late or non-lodgement of the 2001/02 annual superannuation fund returns.

While the actual number of cases has increased in comparison to last year, overall compliance has improved from 36 per cent of returns received on time for the year 2000 to 93 per cent for the year ended June 2002.

APRA General Manager, Mr Ramani Venkatramani, said that the significant reduction was a reflection of better compliance by industry.

Funds referred to the DPP by APRA had not lodged a 2002 return and to date have not responded to the show cause letters and earlier general reminder letters. We do take any responses to these letters from funds into consideration prior to referral to the DPP, Mr Venkatramani said.

This reporting year, APRA again contacted trustees considered most at risk of default and reminded them of their obligation to lodge on time as well as the consequences of breach. APRA also worked with the auditing profession to improve their compliance with reporting and whistle-blowing obligations relating to defaulting funds.

APRA relies on information provided by timely and accurate returns to identify and act on financial and compliance issues. Delayed and/or non-lodgement of returns seriously compromises APRAs ability to protect the interests of superannuants, he said.

We made it clear that APRA would not hesitate to prosecute trustees in cases of wilful default or where fund member welfare was at risk. Industry and auditors have responded positively.

In 2000/1, APRA referred 13 cases to the DPP of which nine were prosecuted, three were withdrawn and one is still before the Court.

Please refer to the attachment for further details.

APRA is the prudential regulator of the financial services industry including banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. It currently regulates $1.5 trillion in assets for 20 million Australians.

For further information:	Media Enquiries only:
APRA Call Centre	Susan Morey
1300 131 060	APRA - Public Affairs
	02 9210 3384
	0438 124 524

Background

Under strict liability provisions of the Superannuation Industry (Supervision) Act 1993 (SIS Act), 13 superannuation funds were referred to the DPP for non-lodgement of the 2000/01 annual returns. These funds were sent reminder and show cause letters in October and November 2001.

Previously, the deadline for providing APRA with the annual return was nine months for small superannuation entities. The timeline was shortened due to APRAs need to be able to target its supervisory activities effectively.

APRA would not normally seek to take enforcement action where breaches are inadvertent and minor technical oversights and do not pose a threat to members interests.

Review of annual returns is a crucial to APRAs off-site surveillance process. APRA relies on this information to gauge the financial and compliance conditions of funds. Systematic and serious late lodgement compromises APRAs ability to perform its prudential function.