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APRA Letter to Productivity Commission

The prudential regulator disagrees with the productivity commission that their system is opaque and confusing.

In a letter to the Productivity Commission (PC) from the Australian Prudential Regulation Authority (APRA) on the PC Draft Report Superannuation: Assessing Efficiency and Competitiveness, the regulator acknowledged that their prudential framework was less mature than that of the other industries that they regulate.

The prudential regulator continued that areas where they see a need for continual improvement are strategic business planning, an assessment of outcomes for members, land the oversight and monitoring and expenditure.

“APRA is placing greater emphasis on how RSE licensees are delivering outcomes for members in its ongoing supervision activities for the superannuation industry,” APRA said writes. “While APRA expects all RSE licensees to be assessing, and taking steps to enhance, outcomes for their members on an ongoing basis, APRA is particularly targeting funds (and products) identified as not consistently delivering quality outcomes or adequately positioned for future sustainability and resilience. APRA’s activities in this area have contributed to decisions by a number of RSE licensees to reduce fees being charged to members, reassess the design of their products, merge with another fund or exit the industry.”

However, APRA challenges the PC’s position that their prudential regulatory architecture is opaque and confusing, and that the overlap with the Australian Securities and Investments Commission (ASIC) has resulted in ‘poor accountability and lack of strategic regulation.’

The prudential regulator argues that the two regulators have complementary responsibilities and share data when necessary.

“With this in mind, APRA and ASIC have prepared an information paper that sets out how the respective agencies undertake their responsibilities, and how they coordinate with each other in an effective manner.

Ensuring stakeholders understand APRA and ASIC’s respective responsibilities, and how they interact on matters of common interest, is clearly important for an effective and efficient regulatory system. The paper will be published imminently on the websites of both regulators.”

In their letter, APRA does acknowledge that their room for improvement in their data collection.

Over the last few months, the regulator has been addressing possible improvement in their D2A data collection model.

And possible replacement system to have better data collection model.

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