The Australian Prudential Regulation Authority (APRA) has today released a response paper and 11 final prudential standards for the superannuation industry.
The release of this package is the culmination of a two-stage consultation process that commenced in September 2011 and was followed by the release of draft prudential standards for superannuation in April 2012. The paper released today outlines APRA’s response to the main issues raised by industry during the consultation process.
Submissions were unanimously supportive of APRA’s objectives and the broad direction of the draft prudential standards, including the proposed range of topics the standards will cover. Many submissions highlighted the need for guidance on the implementation of the standards, and APRA expects to release a suite of prudential practice guides for consultation in late 2012 and early 2013.
APRA Deputy Chairman Ross Jones said the introduction of prudential standards for superannuation is an important milestone as all APRA-regulated industries are now subject to prudential requirements.
‘APRA will work with superannuation trustees and boards of directors to monitor how they meet the new prudential requirements and uphold their responsibility to prudently manage superannuation funds in the best interests of beneficiaries.
‘APRA’s prudential standards are principles-based, meaning that they are not a one-size-fits-all approach, but allow superannuation entities of all sizes and complexity to meet the requirements in a manner appropriate to their business operations,’ Mr Jones said.
The final prudential standards include six standards covering matters common to other APRA-regulated industries, where APRA’s approach has been to harmonise requirements between regulated industries where appropriate. These standards are:
- Prudential Standard SPS 220 Risk Management;
- Prudential Standard SPS 231 Outsourcing;
- Prudential Standard SPS 232 Business Continuity Management;
- Prudential Standard SPS 310 Audit and Related Matters;
- Prudential Standard SPS 510 Governance; and
- Prudential Standard SPS 520 Fit and Proper.
The remaining five prudential standards cover matters that are specific to superannuation. They include reforms the Government recommended that APRA implement as prudential standards, as well as the relocation of some existing requirements and guidance into new standards. These standards are:
- Prudential Standard SPS 114 Operational Risk Financial Requirement;
- Prudential Standard SPS 160 Defined Benefit Matters;
- Prudential Standard SPS 250 Insurance in Superannuation;
- Prudential Standard SPS 521 Conflicts of Interest; and
- Prudential Standard SPS 530 Investment Governance.
The majority of the requirements in the prudential standards will take effect on 1 July 2013.
APRA’s response paper and the 11 final prudential standards can be found on the APRA website.