Super trustees must do better: Byres

APRA will soon need to have some difficult conversations with poorly performing superannuation funds, according to chair Wayne Byres.

Speaking at a Gilbert + Tobin event in Sydney this week, Byres said the ability of the prudential regulator to hold trustees to account for not delivering for super fund members had been strengthened by stronger prudential standards and enforcement powers.

Byres specifically noted the impact of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No 1) Bill 2019 and the new prudential standard SPS 515 Strategic Planning and Member Outcomes.

The combination of the two will embolden APRA in its mission to "drive a much more intense focus on member outcomes", Byres said.

"It will inevitably produce some difficult discussions with trustees who are not delivering for their members - put very bluntly, are you going to get better or get out? - but all have had fair warning given the increased attention on this issue in recent years," he said.

While the APRA chair noted the approach was not necessarily new - pointing out the number of super funds reduced from 278 to 114 as standards increased over the last decade - the difference now came down to the level of pressure the regulator would be willing to apply.

"It is not as though there hasn't been any pressure driving the exit of trustees and funds that can no longer meet required standards," he said.

"My point today is simply that that pressure will only increase from hereon."

Byres clarified that APRA's new approach wouldn't simply be typified by increased regulatory pressure. An overhaul of the industry's data collection practices and a new focus on transparency are also part of the new method.

Combining the two, APRA will begin publishing a "selected set" of performance-related measures and benchmarks, otherwise known as the regulator's previously flagged "traffic light" system.

"Our goal here is pretty simple: to identify those trustees that, when looked at across a range of dimensions, do not seem to be delivering value-for-money outcomes," Byres said.

"It will add to the pressure on trustees to address persistent underperformance, or reconsider their continued presence in the industry."

Byres said one round of work already undertaken saw the regulator notify a number of funds of APRA's belief they were "potentially" generating poor outcomes.

"Given the limitations of the exercise, we didn't publish the data, but did share it with the trustees concerned," he said.

"It resulted in reduced costs for a number of funds or, in about half the cases, those funds being wound up."

Read more: APRAMember OutcomesSuperannuationWayne ByresSuper consolidation
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