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Review of 2013 super reforms supports APRA’s plans to strengthen prudential framework

Tuesday 30 April 2019

A review of the Australian Prudential Regulation Authority’s (APRA’s) superannuation prudential framework has found it met its original objectives but must keep evolving to ensure members’ interests are protected.

APRA commenced a post-implementation review of the framework introduced as part of 2013’s Stronger Super reforms in May last year, to assess how it had performed in the five years since it was introduced. Until the package of 13 prudential standards, supporting guidance and reporting standards came into force, registrable superannuation entity (RSE) licensees were not subject to legally binding prudential standards in the same way as other APRA-regulated entities.

The review found the prudential framework had materially lifted industry practices in key areas as governance, risk management and outsourcing. But it also highlighted the need for APRA to continue strengthening prudential requirements in several areas, including board appointment processes, management of conflicts of interest and life insurance in superannuation.

APRA Deputy Chair Helen Rowell said it was important that the prudential framework continued to evolve as the industry developed and regulatory priorities changed.

“The Stronger Super reforms deliberately focused on ensuring superannuation trustees that often manage billions of dollars on behalf of members had the necessary frameworks in place to effectively administer the fundamentals of operating their business,” Mrs Rowell said.

“As the industry has matured and lifted its practices, we have shifted our emphasis to ensuring trustees are focused on enhancing member outcomes, especially with last December’s package of reforms.

“We are already taking steps to strengthen the prudential framework in many of the areas highlighted by the review, and we will look to make further changes to incorporate its findings as we progress our superannuation policy priorities. This will include consideration of measures to address relevant recommendations in the financial services Royal Commission report and the report on the Productivity Commission’s superannuation review.”

Mrs Rowell recently announced APRA’s intention to use new powers granted this month by Federal Parliament to more forcefully hold superannuation trustees and directors to account, as well as using an enhanced data collection to improve transparency around industry performance.

Copies of the review’s findings are available on APRA’s website at: https://www.apra.gov.au/post-implementation-review-apras-superannuation-prudential-framework.

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 $6 trillion in assets for Australian depositors, policyholders and superannuation fund members.