The standards by which super fund operators measure how they govern themselves will likely be revised after a government regulator announced it intends to strengthen existing governance practices.
The Australian Prudential Regulation Authority (APRA), which is responsible for regulating banks, credit unions, insurance companies, most of the superannuation industry, announced on Friday that it would revise its governance standards for registrable superannuation entity (RSE) licensees.
APRA’s decision to review operational governance standards (referring to how the licensee identifies its strategic objectives and plans, and runs the business on a day-to-day business) came after it identified areas in which the current standards can be improved.
“While many RSE licensees have embedded sound operational governance practices throughout their business operations, APRA’s supervision continues to identify weaknesses in the practices of some RSE licensees,” APRA said.
These weaknesses included planning processes which were based on “unrealistic assumptions” and lacked adequate rigour, a limited link between business objectives and the delivery of quality outcomes for members, and “insufficient rigour” in decision-making and monitoring processes.
Consequentially, APRA has requested that stakeholders and licensees provide feedback, and will engage with members of the industry in the coming weeks to undertake a review and create a more appropriate set of standards to help RSE licensees meet the needs of their funds’ members.