The Australian Prudential Regulation Authority (APRA) has committed to “intensifying” its focus on areas of the superannuation industry in order to “push for improvements” and address issues.
Last week, APRA deputy chair Helen Rowell delivered a speech to the Association of Superannuation Funds of Australia (ASFA) Conference in which she noted that the superannuation industry had grown rapidly in recent years, with the average fund now sitting at $10 billion, compared to only $2 billion 10 years ago.
“It was only six years ago that there were no funds with over $100 billion in assets and now we have three, with more to come,” Rowell said.
“These are significant rates of growth, and as industry assets and member balances have risen, so have the stakes. With growth and maturity comes an expectation – indeed a requirement – of a commensurate level of capability and professionalism for those running what are clearly significant financial services businesses.”
As uncertainty remains, Rowell said APRA will intensify its focus on the superannuation industry's issues, including governance, underperformance, and members' best interests.
“To this end, we will continue to push for improvements, so that member interests are assured, poor performance is rectified, and (where needed) a whole of system approach is taken to address issues,” she continued.
The regulator also aims to continue improving the quality of governance at superannuation funds this year, with reforms to the prudential framework combined with thematic supervisory activity. It will also focus on diversity to support organisations' resilience.
“A board that has people with a diverse range of skills and experience is likely to be better placed to deal with the next unexpected challenge – which will almost certainly be different to COVID-19,” Rowell said.
“In an uncertain world, one thing I can confidently predict is that the industry, and the environment in which it operates, will continue to change. Trustees will continue to be required to make decisions in an environment characterised by ambiguity and imperfect information.”