Labor MP Andrew Leigh has scrutinised the retail superannuation segment, after two funds paid less than half of their early release claims within the five-day limit.
APRA alluded that it may compare and contrast how different categories of funds perform on the early access scheme in future during a hearing held by House of Representatives standing committee on economics on Wednesday.
Dr Leigh had pointed to two retail funds that had failed to pay out more than half of their early release claims during the five-business day limit set by APRA: Westpac-owned BT Funds Management’s ASGARD Independence Plan Division Two and Future Super, which is looked over by Diversa Trustees.
According to APRA’s data on payments to 24 May, BT’s ASGARD Independence Plan Division Two made 46.2 per cent of its payments within five business days and 38.4 per cent within six to nine business days.
The BT fund had paid out $57.4 million, covering 6,701 claims out of a total 7,727 received applications. The average payment was $8,570.
Meanwhile Future Super had paid 46.3 per cent of its early release claims within the five-day limit and 47.3 per cent within six to nine days.
The fund had paid $12.1 million across 1,692 claims out of a total 1,797 received applications.
“That seems extraordinarily slow. Will APRA take any action on funds which are underperforming to such an egregious extent?” Dr Leigh asked.
APRA deputy chair John Lonsdale responded APRA is expecting funds to release the claims as early as possible.
“We want the time frames to be short, to the extent that there are no issues,” Mr Lonsdale said.
“We will look at them closely to see if we can make sure that those issues are avoided. At this stage, that’s all I can say.”
Dr Leigh then asked if the problems are systemic within the retail sector, as opposed to industry funds.
“Do you have a theory for the slow rates of payment among retail super funds?” he asked.
“No, I don’t have a theory and I think, given the examples… it’s too early to make an assessment on cohorts and whether one cohort is slower than another cohort,” Mr Lonsdale replied.
“We will try to focus on the longer-term and then make some assessments as to how that has played out.”
Dr Leigh countered: “Your data very clearly does show that one cohort is slower than another, I guess what you’re saying is you don’t yet have a theory for why that is.”
It is still “early days” in the scheme, Mr Lonsdale commented, with payments still being processed.
“There is variability as you point out, and the extent that it can be solved quickly with that is something we will look at,” he said.
Dr Leigh also asked the representatives from ASIC and APRA if committee chair Tim Wilson had asked for an examination of conflicts of interest with retail funds, after he wrote a letter to APRA asking for an inquiry into industry super funds and their vertical integration models.
Mr Wilson said he had not, as questions around conflict of interest in the retail fund sector had been addressed during the royal commission.
The two big four banks have made certain roles redundant in the higher ranks in ...
ifa, in partnership with Capital Group, is pleased to announce the finalists for...
The financial services industry has been forecast to be the most likely to adop...