In a blog article, KPMG partner of superannuation advisory, Adam Gee said in late June ASIC released the report REP 529 Member Experience of Superannuation, which requires trustees of large APRA-regulated funds to place greater focus on the manner in which they disclose critical fund information to their members.
This was followed by Minister for Revenue and Financial Services, Kelly O’Dwyer’s announcement of draft legislation aimed at improving member outcomes, which will incorporate significant new powers for APRA, said Mr Gee.
The proposed legislation, he said, provides additional powers to APRA to intervene at any earlier stage where it has prudential concerns surrounding the actions of a trustee.
“This is substantially different to the powers APRA has in relation to the superannuation industry and in line with their powers in relation to the banking and insurance industry,” he said.
“Either way, this should once again put trustees on notice and suggests that APRA will be far more intrusive in overseeing superannuation fund operations going forward.”
The government has also proposed annual member meetings for superannuation meetings, the cost of which, he predicts, will likely outweigh any benefits for the majority of funds.
In regards to ASIC Report 529, the regulator he said is placing greater focus on ensuring that funds’ disclosure within product disclosure statements, regular communications and fund websites is comprehensive and aligns with underlying fund policies and procedures.
“Additional detailed disclosure may provide further challenges for funds, particularly when, in many cases, it is difficult to get members to even read the existing raft of disclosure material already available,” he said.
While the additional powers for the regulators may improve overall member outcomes, he said, the measures proposed, such as annual member meetings, will require material additional work for funds to comply.
“This will potentially increase costs further in what is already a competitive marketplace, which operates in a cost constrained environment, where fees continue to remain in the sights of regulators and ongoing government reviews,” he noted.
“But ultimately super funds will have to comply with the increased regulation while not letting higher costs worsen member experience. That is the new paradigm.”
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.