Superannuation
FSC, ISA face off over APRA heat map

Two of the most influential lobbying groups in superannuation have taken vastly different positions on APRA's recently unveiled MySuper heat map.

The Financial Services Council and Industry Super Australia have aired uniquely different perspectives on APRA's new MySuper heat map, with the FSC urging conservative use of APRA's new tool.

According to FSC chief executive Sally Loane, the heat map's information should not be viewed in isolation, noting the industry was not consulted on APRA's methodology.

"We don't have full understanding of APRA's approach; this is why we caution against using the information to make a like-for-like comparison of products. We believe it is far more complex, and in some cases problematic," Loane said.

"For example, the reference portfolio used by APRA to benchmark returns appears simplistic, and it is unclear whether the level of risk adjustment is appropriate.

"We are also concerned that the analysis of sustainability relates to the whole of a super fund rather than the specific products being examined, presenting a potentially misleading view."

The FSC chief executive urged APRA to "be open to engaging on genuine concerns about data and methodology" over the coming weeks, and also flagged the council's concern over APRA's plans to expand the heat map to the choice sector.

Loane said the variation in choice super products made them "significantly" more difficult to accurately compare.

"We recommend APRA be cautious in extending this exercise to choice products before they have access to appropriate, comparable data," she said.

However, Industry Super Australia chief executive Bernie Dean doubled down, saying the system should be applied "with equal rigour" across the super system, including the choice sector, where underperformance was more prevalent than in MySuper products.

"This is the first step to ensuring consumers have the information they need to be able to look at different funds and products, and have confidence they are comparing apples with apples," Dean said.

"Too many Australians are still missing out on hundreds of thousands of dollars in retirement savings due to the chronic underperformance of some funds. This is a welcome start but there is more to do."

To truly and effectively tackle chronic underperformance this tool must apply across both the MySuper and Choice sectors and include rigorous benchmarks, he added.

"As the custodians of Australians' retirement savings we all have a responsibility to improve the system and put members' interests first - and that means dealing with underperformance, wherever it is," Dean said.

Earlier this month APRA deputy chair Helen Rowell said the regulator's Superannuation Data Transformation project would seek to improve the data collection efforts in the choice sector, which will allow the heatmap initiative to expand across the sector.

Read more: APRAMySuperFSCIndustry Super AustraliaBernie DeanSally LoaneFinancial Services CouncilHelen RowellISA
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