AAP Finance

Retail funds lukewarm on mooted benchmarks

By AAP Newswire

Retail and industry super advocates are at odds over calls to give the prudential regulator powers to better police the performance of superannuation funds.

The Association of Superannuation Funds of Australia says while it supports a proposal to overhaul APRA's capabilities, shifting the regulator's focus from long-term stability to short-term performance measures risks damage if not implemented "carefully".

Industry Super Australia, meanwhile, has welcomed calls by the independent APRA Capability Review panel to embed and publish performance benchmarks for superannuation funds and to allow APRA to take action on underperforming funds.

"(The review) confirms what the royal commission already told us - that consumers have not only been let down by the institutions that perpetrated the misconduct, they have ultimately been let down by the regulator," ISA acting chief executive Matthew Linden said on Wednesday.

ASFA chief executive Martin Fahy warned of the dangers in recklessly deviating from APRA's "long-held" focus on prudential stability and systemic risk.

"Achieving sound investment performance and broader member outcomes is a long-term journey, measured in terms of decades, against objectives set by the trustees that solve to the needs of their member base," Dr Fahy said.

"Simplistic approaches to assessing member outcomes, such as reliance on league tables of short-term fund performance, reduce the efficacy of the superannuation system and go against the interests of fund members."

The independent review panel roasted APRA for its secretive culture and low-profile approach to enforcement, recommending an overhaul of the watchdog's organisational structure.

Former consumer watchdog boss Graeme Samuel led the review after the regulator was slammed in the banking royal commission.

Meanwhile, FinTech Australia chair Alan Tsen said he was heartened by APRA's acceptance in principal of all of the recommendations in the Capability Review report.

"It shows an appetite for change that we welcome," Mr Tsen said.

The Customer Owned Banking Association also congratulated APRA for agreeing to more actively champion the consideration of competition in its decision-making processes.