Letters

Strengthening investment governance and member outcomes in Platform Trustees
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This image shows APRA's contact details: AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY - 1 Martin Place (Level 12), Sydney, NSW 2000 - GPO Box 9836, Sydney, NSW 2001. Telephone: 02 9210 3000, Website: www.apra.gov.au. Australian coat of arms - APRA

To: All Platform Trustees


Trustees have an essential role as stewards of the superannuation savings of the Australian community. Consistent with the Superannuation Industry (Supervision) Act 1993 and APRA’s prudential framework, trustees must prudently select, manage and monitor the investments made available to members.

Trustees who offer platforms (‘Platform Trustees’) facilitate choice and flexibility by offering a diverse range of investment options to both superannuation members and other investors, typically with the assistance of a licenced financial adviser. For superannuation members Platform Trustees play a key decision-making role regarding what investment options are offered, and in overseeing their ongoing suitability and performance. While a Platform Trustee may not manage each investment option offered, they must exercise diligence ensuring the platform’s investment menu as a whole is appropriate, each investment option is true to label, delivers value to members and is underpinned by robust decision making and good governance.

APRA and ASIC have distinct but complementary regulatory roles relevant to the platforms ecosystem. APRA, as the prudential regulator, is responsible for ensuring Platform Trustees adhere to the requirements in the prudential standards, relating to the onboarding, ongoing due diligence and monitoring of investment options, as well as promoting good member outcomes. Both regulators seek to ensure sound processes are in place to protect superannuation members’ financial interests from potential harm. 

APRA has had a multi-year focus on lifting trustees’ investment governance practices and improving outcomes for members. Over recent years APRA has strengthened relevant Prudential Standards, SPS 530 Investment Governance (‘SPS 530’) and SPS 515Strategic Planning and Member Outcomes (‘SPS 515’), along with associated guidance. In December 2024, APRA also published the results of its thematic review into aspects of investment governance, which identified areas of weaker practices across some Platform Trustees.1 

APRA’s thematic review of platforms was flagged in APRA’s 2024-25 Corporate Plan and commenced earlier this year. This letter provides insights into APRA’s observations from its review, including specific areas where further improvements are required to uplift investment governance practices such that they are sufficiently robust and fit for purpose in further safeguarding member outcomes. This letter also sets out next steps. 

APRA’s review and expectations

APRA’s review included Platform Trustees collectively responsible for almost 95% of superannuation platform assets. APRA reviewed extensive information and documentation for a cross-section of platform menus and assessed frameworks and practices with reference to SPS 530 and SPS 515 (and related guidance). 

APRA observed a significant range of practices across Platform Trustees. Further detail, including areas for improvement and better industry practice, is provided in the Attachment. While some Platform Trustees have significantly more work to do than others, APRA’s overarching expectations for the industry are as follows:

  • On-boarding: Platform Trustees should improve on-boarding practices, including in relation to trustee investment governance frameworks and policies, manner of reliance on external research and ratings, and identification and management of potential and actual conflicts of interest.
     
  • Ongoing monitoring: Platform Trustees should improve their monitoring of investment options, including in relation to trustee investment governance frameworks and policies, triggers, reporting and oversight.
     
  • Remedial action and member transfers2: Platform Trustees should improve oversight where outcomes for members are not being delivered, with clearly defined processes to ensure timely and effective remedial action. 

APRA emphasises that the core duties of trustees are the same irrespective of the business model adopted. Trustees are obligated to exercise care, skill and diligence in relation to all matters affecting the fund. From 15 March 2025, these obligations were further strengthened through the commencement of the Financial Accountability Regime (FAR), which applies to trustees as well as their directors and senior executives. 

Importantly, trustees cannot outsource accountability. Whilst there can be numerous parties involved in the distribution of products via platforms to members, Platform Trustees remain accountable for determining whether an investment option is suitable for inclusion on the investment menu and ensuring that the overall platform menu offering supports good outcomes for members.  

Next steps 

Based on the findings of this review, APRA will provide each in-scope Platform Trustee with an individual assessment letter bilaterally and escalate supervisory intensity as required. 

With reference to this letter, APRA requires all Platform Trustees to:

  1. Determine any and all required actions and timing to strengthen frameworks and practices.
  2. Consider whether they have breached the prudential standards and obligations and inform APRA accordingly.
  3. Review and confirm FAR accountabilities including with reference to the core duties and expectations outlined above. 

APRA will engage with in-scope Platform Trustees directly regarding the timing of these required actions. 

APRA will actively and closely monitor steps taken by Platform Trustees. Where planned enhancements or implementation are assessed inadequate, Platform Trustees can expect robust regulatory action and the full use of APRA’s regulatory tools. 

As part of its ongoing supervisory focus on Platform Trustees, APRA will consider whether further enhancements to the relevant prudential standards and guidance are necessary.

Yours sincerely
 

Margaret Cole 
Deputy Chair

Attachment A: APRA’s observations


APRA’s observations of weaker practices and current better practices in the areas of onboarding, ongoing monitoring, and remedial action and member transfers are outlined below.

Weaker practices

Current better practices

A. On-boarding
  • Compliance-driven processes that operated in isolation, without clear consideration of how the onboarded option promotes the best financial interests of members. Instances of lack of consistent documentation evidencing risk consideration and compliance with applicable standards.
  • Internal policy requirements not being applied rigorously and consistently when evaluating whether an investment option was suitable for inclusion on the platform.
  • Large dependency on external research and ratings agencies to approve new investment options, with limited internal assessment of the information collected.
  • Collection of conflict management policies (or attestations) but a lack of thorough assessment of their quality, nor examination of potential and actual conflicts across the stakeholders relevant to the operation and distribution of the investment option.
  • Due diligence assessments with a dedicated section evaluating whether the onboarding of an option is consistent with members’ best financial interests. This is supported by robust analysis, and approvals are only granted where defined acceptance thresholds are met.
  • Assessments use a wide range of external and internal research and ratings to identify suitable investment options, with approval recommendations and decisions carefully reviewed and challenged. Examples of research conducted includes performance and fee analysis relative to pre-determined benchmarks, and evaluating the quality of the valuation, stress testing and liquidity analysis.
  • Specification and implementation of investment holding limits based on thorough assessment of the risk profile of the investment option. This approach protects members by reducing exposure to investments that carry higher risks.
  • A policy to manage potential conflicts of interest effectively (including avoidance) when considering onboarding investment options issued or managed by a related party of the proposing entity’s corporate group. Where investment options operated by a related party of the trustee’s corporate group are onboarded, structural separation and other appropriate controls are in place to manage potential conflicts.  
B. Ongoing monitoring
  • Inconsistent monitoring of investment and fee related metrics relative to internal policies.
  • Lack of effective triggers specified in monitoring frameworks to identify and respond to performance and/or risk concerns in a timely manner. Thresholds for identifying under or outperformance were generally ineffective as they were set at levels unlikely to be activated.
  • Lack of timely, comprehensive and objective reporting of key risk and performance issues across investment options, including instances of significant outperformance that could signal potential concerns.
  • Unclear exceptions reporting approaches, with inconsistent escalation of performance issues identified by third parties and investment options where performance data was missing. 
  • Frameworks containing a comprehensive suite of measures to assess emerging and long-term performance and risk issues. Some examples include monitoring for negative news; unusual fund flows; Comprehensive Product Performance Package measures including forecast Performance Test metrics; and liquidity, valuation, risk, volatility and forward-looking indicators.
  • Well-integrated due diligence practices that are applied consistently across both the initial onboarding and ongoing monitoring of investment options. A range of monitoring controls including oversight of investment holding limits, adviser trends, multi-faceted triggers and event-based monitoring.
  • Appropriately defined industry peer group of comparable choice products established to facilitate comparative analysis.3 This enables the evaluation of investment return and risk, and fees and costs (amongst other factors) against objective benchmarks, thereby supporting a robust Outcomes Assessment determination.
C. Remedial action and member transfers4
  • Discretionary approaches to remedial action, typically retaining underperforming options and closing them to new investments and contributions. Without clear and time-bound plans, existing members remain in these investment options without resolution for extended periods.
  • Lack of maturity in remedial action and member transfer frameworks, with unclear or undocumented processes and responsibilities – particularly when an investment option that has been closed from receiving contributions from new or existing members continues to underperform.
  • Well-established and transparent governance processes, with proactive involvement from the Office of the Superannuation Trustee ('OST', or equivalent 'member voice' representative). The OST is empowered to be the ‘member advocate’ in challenging recommendations and to be an active decision-maker in rectifying underperformance or member transfer considerations.
  • Well-structured framework(s) that enable timely and consistent remedial action and member transfer decisions. These include clear decision-making roles and the required analysis, such as tax impacts and identification of successor options, products or RSE.

Footnotes

1 APRA, Governance of Unlisted Asset Valuation and Liquidity Risk Management in Superannuation, December 2024. 

2 Trustee-initiated transfer of beneficiaries to another RSE.

3 In accordance with s52(10A) of the SIS Act.

4 Trustee-initiated transfer of beneficiaries to another RSE.

2025

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