The Prudential Regulation Authority (APRA) has formally been given stronger powers to bring the trustees of underperforming superannuation funds to task.
The Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No 1) Bill 2019 provides APRA with a broad and long sought-after power to impose directions on funds.
It also gives APRA the power to take civil penalty action against trustees and directors for breaching their obligations to members, including the duty to act in the best interests of members.
The new powers for APRA include those recommended by Royal Commissioner Kenneth Hayne in the final report of his investigation into misconduct in the banking, superannuation and financial services industry.
Deputy Chair of APRA, Helen Rowell (pictured) said the legislation significantly strengthened APRA’s ability to drive trustees towards improved outcomes for members and to address underperformance at an early stage.
“Previously, APRA could only direct a superannuation trustee after a contravention of the law had taken place, or where APRA believed there was an urgent, material threat to members’ interests,” Mrs Rowell said.
“The new directions power gives APRA the ability to intervene at an early stage before members suffer significant harm.”
She said that in some instances, acting in the best interests of members would require underperforming funds to merge or exit the industry.
“If trustees and trustee directors are not willing or able to meet their best-interests duties to members, they should be prepared to face serious consequences,” Mrs Rowell said.
“All trustees, including those with strong recent financial performance, need to avoid complacency and be proactive in ensuring they continue to meet their obligations to members into the future.”
She said APRA would ensure this occurred by targeting underperforming funds, holding the industry to account through enhanced transparency measures, and using its strengthened powers when needed.
