APRA is calling on the Senate to increase its regulatory powers to help improve superannuation governance, transparency and member outcomes.
APRA deputy chair Helen Rowell told the Senate Economics Legislation Committee aiming to address weaknesses in the superannuation regulatory framework that increasing APRA's power and control over trustees is necessary in the wake of collapsed Trio Capital, a scheme which defrauded Australians of the their superannuation.
APRA's powers currently in place for APRA-regulated industries should be broadened to superannuation, she said.
"This proposed power will enable APRA to intervene at an earlier stage, with a wider range of options, than is currently the case. At present, APRA is limited to taking action where a trustee has already breached the law, rather than being able to intervene to prevent the breach," Rowell said.
"At present an entity wishing to operate as a superannuation trustee must be authorised by APRA but there is no requirement for APRA approval where ownership changes after authorisation. This makes it difficult for APRA to prevent a change of ownership that may adversely impact the interests of fund members, such as occurred with Trio."
Rowell welcomed the proposal to replace the legislated MySuper 'scale test' with a broader 'outcomes assessment' as the existing scale test is insufficient to indicate whether a trustee is providing quality or value-for-money outcomes for members.
The regulator is also proposing to authorise and cancel MySuper products that don't meet legislative or quality requirements.
APRA also supports the proposed amendments to require a minimum of one-third independent directors and an independent chair on superannuation boards, Rowell said.
"It will ensure all boards have a meaningful proportion of directors free from association with related entities - whether that is a parent organisation within a retail group or a nominating member or employer representative body of an industry fund - so there is adequate objectivity and challenge in decision-making and more effective conflict management. While some in the industry contend the existing arrangements serve their members well, APRA sees little downside to an additional injection of independence."
Over two days, the public hearing covered proposals to amending three superannuation bills: Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 1) Bill 2017; and Superannuation Laws Amendment (Strengthening Trustee Arrangements) Bill 2017; and Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No. 2) Bill 2017.
Industry Super Australia public affairs director Matt Linden also spoke at the hearing said the Coalition is pushing ahead to make Australia's industry super funds more like the banks, with public hearings into a Bill that, if passed, will fundamentally change the way they're governed.
"The government should be throwing the book at the banks - instead they're changing the super rules for their benefit."