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APRA consults on updated investment governance guidance for superannuation trustees

Thursday 17 November 2022

The Australian Prudential Regulation Authority (APRA) has released for consultation updated guidance on investment governance for superannuation trustees. 

The guidance is designed to assist trustees in meeting their requirements under the recently strengthened Prudential Standard SPS 530 Investment Governance (SPS 530), which comes into effect on 1 January 2023. 

Draft Prudential Practice Guide SPG 530 Investment Governance (SPG 530) includes new and additional guidance on:

  • the new requirements in SPS 530, including for liquidity management, stress testing and valuations practices; and
  • APRA’s expectations of how trustees will consider environmental, social and governance (ESG) risk factors as part of their overall investment risk management. 

APRA Deputy Chair Margaret Cole said the updated guidance was intended to drive improvements in the quality of investment governance at every stage of a fund’s investment strategy, from formulation to implementation, to maintenance and oversight.

“Many funds have grown in size and complexity and the intensity and quality of governance must keep pace. 

“In strengthening investment governance, APRA expects to see trustees having investment strategies that are in the best financial interests of their members, including robust oversight of valuations of assets and improved liquidity management,” Ms Cole said.

APRA is seeking feedback from industry stakeholders on the draft guidance and the integrated format, which combines the prudential standard requirements and prudential practice guide. The consultation period closes on 17 March 2023.

A copy of draft SPG 530 is available on the APRA website at: Prudential Standard SPS 530 Investment Governance in Superannuation.

Governance

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The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, private health insurers, friendly societies, and most members of the superannuation industry. APRA currently supervises institutions holding $7.9 trillion in assets for Australian depositors, policyholders and superannuation fund members.