APRA has only filed an enforcement action against a super fund over a sole purpose test breach once in the last three decades, but it has rejected that there is an issue with its regulatory approach.
Appearing before the Senate economics legislation committee, APRA deputy chair Helen Rowell said that the regulator needed to “look at issues on their merit” and that actual enforcement actions were rare.
“There is a historic action – and we’re going back quite some time – where we did take action against a small fund for, in essence, making an investment that was in breach of the sole-purpose test. That is the only case to date,” Ms Rowell said.
“Our focus has very much been on the wider behaviour of trustees…and where we can apply our resources to get the most impact most effectively. That has been, over time, focusing on the implementation of prudential standards, heat maps, dealing with underperformance, industry consolidation and working to bring expenses down.”
Ms Rowell agreed with Senator Andrew Bragg that it was important to punish breaches, but that the need to build an evidence base and go through due process constrained their ability to launch enforcement actions.
“Collating the evidence to give you reasonable prospects of a) getting the action pursued through the courts and then b) being successful is challenging,” Ms Rowell said.
ASIC was also grilled in relation to its actions against super funds, but warned Senator Bragg that it wasn’t the “price regulator” and had limited ability to launch enforcements on that basis.
“We are conscious that the disclosure that is made needs to be fair and reasonable. You’ve brought to our attention an AustralianSuper case which we investigated and felt that we didn’t have enough evidence to take as misleading and deceptive in a way that would meet the standard of a court,” said ASIC commissioner Danielle Press.
“However, we would expect that super funds, when changing their fees, are doing so with the best interests of their members in mind and that they are disclosing such fee changes in a way that is fair, reasonable and transparent.”
The Australian Institute of Superannuation Trustees (AIST) also raised criticisms around APRA and ASIC's soft regulation during the hearings on Thursday, commenting the proposed reforms to the best interests duty in the Superannuation Industry Supervision (SIS) Act would not be needed if they applied their powers fully.
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