The proposed level of involvement by the Australian Prudential Regulation Authority in commercial arrangements between super funds and employers under the new draft MySuper Bill is unnecessary and inefficient, according to retail bodies.

Submissions to the Parliamentary Joint Committee on Corporations and Financial Services call into question the new authorisation requirements for tailored products, saying the condition will reduce competition and damage the tender process.

Under the proposed amendments, trustees would require a separate authorisation from APRA for each MySuper product offered, conceivably resulting in thousands of authorisations for each tailored product that is offered for a different employer.

The Financial Services Council, in its PJC submission of December 23, believes that, "where the trustee is meeting its licence conditions and statutory obligations, it should have discretion to issue a tailored MySuper product in relation to a large employer."

The FSC submission holds the draft policy announced in November 2011 is inconsistent with the Stronger Super Information Pack, issued by Minister for Financial Services and Superannuation, Bill Shorten in September 2011.

The Information Pack indicated a fund would be able to seek authorisation to offer a MySuper product then, similar to the situation as it currently stands, issue tabled plans for large employers provided the fund adhered to the conditions of authorisation.

BT Financial Group, involved in the development of the FSC submission provided further documentation on this specific aspect of the policy in its own response issued on January 20.

"We believe that APRA should only be responsible for licensing the ability of the trustee to offer MySuper products, which would be a natural extension of its current role in licensing trustees," BTFG wrote.

"The proposed approval process will limit the ability of funds to respond flexibly to differing workplace needs and will reduce competitive pressure within the superannuation industry," the submission held.

The 180-day period the legislation allows APRA to approve an offering is a further cause for concern by BTFG.

The group argues members will suffer from the delay in transition to a new fund and employers will suffer from a long-period of uncertainty as to the acceptance or otherwise of a commercially negotiated agreement.

The industry will additionally become less competitive, according to BTFG, as larger employers will be unlikely to conduct a tender due to the amount of time it would take for each bidder to seek approval for their tailored MySuper product.

The definition of a large employer is another issue of contention, with clarification being sought from both sides of the industry.

While the Stronger Super Information Pack indicated the definition was based on employers with more than 500 employees, the policy refers instead to 500 "members".

"If the requirement was based on 'members' rather than 'employers' that have a workforce greater than 500 staff, the parties would need to determine whether more than 500 employees are contributing to any one fund," said the FSC submission, which recommended employee numbers as the basis for the large employer definition.