Tick-box compliance unwelcome: APRA


By Krystine Lumanta

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The Australian Prudential Regulation Authority (APRA) is expecting regulated superannuation funds and trustees to go above and beyond the body’s prudential standards in relation to the latest industry reforms.

APRA senior manager Katrina Ellis said there was an overwhelming amount of legislative changes the industry needed to get its head around, with the transition expected to happen in the next couple of years.

Thus the prudential regulator needed to ensure it had adequate coverage and visibility of how trustees were approaching the prudential standards.

“Now that we’ve seen the MySuper applications, the focus for all of us is very much turning to how we are going to supervise in this world with prudential standards on an ongoing basis,” Ellis told the Actuaries Institute Risk and Regulation Seminar in Sydney yesterday.

“There are a lot of new policies, frameworks and procedures that need to be documented through the prudential standards.

“We don’t want tick-box compliance.”

Ellis said APRA’s first step was to ensure there were no compliance gaps.

“The prudential standards are principles based and we really want each trustee to tailor them to their own circumstances, but because of the large workload, there’s been a bit of ‘let’s just get something in place to hit the mark with the prudential standards’,” she said.

“There really is a lot of work to do to bed these down and to make sure that people are actually living and breathing the prudential standards rather than just copying and pasting words from our standards and saying they’ve taken the factors into consideration.”

APRA’s prudential standards are supported by prudential practice guides. It will finalise its remaining prudential practice guides by November.

To date, APRA had authorised 62 registrable superannuation entity licensees to operate a MySuper product, Ellis said.

“It’s very much a work in progress for us and there’s certainly a shortlist of items that supervisors are noting down to follow up,” she said, adding it had been a learning curve watching how the industry had created its products.

“When I think back to two years ago, we were all thinking there would be about 1000 MySuper products; some people were saying 5000.

“We think we’re about halfway with the number of products.”

The big surprise was that APRA was not expecting many individual, tailored, large employer MySuper products, even though the legislation was set up to allow for them, she said.

In regards to SuperStream, she said the regulator remained involved with super funds around its implementation.

“It’s an industry-wide, simultaneous IT build, which is a pretty heroic attempt to move the entire industry into e-commerce,” she said.

“It’s just kicked off and the ATO (Australian Taxation Office) has had one round of funds go through their transition to electronic rollovers.

“Most importantly, there’s broad acknowledgement that the end point of where we’re trying to get to with SuperStream is a vast improvement from where historically we’ve been.”

She said it would be a difficult implementation process for everybody to build the IT systems that would allow them to communicate to the rest of the industry in a standardised way.

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