APRA SHOULD HAVE MORE POWER TO SUPERVISE ALL SUPERANNUATION FUNDS, SAYS ABA SUBMISSION Sydney, 25 February, 2002: The Australian Bankers’ Association (ABA) says the regulator, the Australian Prudential Regulation Authority (APRA) should be given more power to properly supervise superannuation funds, and that reform be undertaken to close gaps in the current laws. The ABA has provided a submission to the Federal Government’s Superannuation Working Group commenting on the proposals outlined in the Issues Paper, “Options for Improving the Safety of Superannuation”, released last year by the then Financial Services Minister, Joe Hockey. David Bell, Chief Executive of the ABA, said: “The compulsory nature of superannuation requires that the supervision of superannuation funds should be of the highest possible standard. It is timely to review the existing arrangements in an attempt to further minimise risk.” “The ABA would like to see APRA clearly responsible for the supervision of all superannuation funds, except DIY, and the shifting of all prudential safety issues out of the Superannuation Industry Supervision (SIS) Act and into a new piece of law.” “The changes discussed in the ABA submission are designed to close the current gaps in supervision of superannuation funds, move to a regime which has the required legislative backing for APRA  to provide tailored supervision. In other words, different and appropriate supervision for different types of superannuation funds.” In addition, the ABA supports the following options included in the Issues Paper “Options for Improving the Safety of Superannuation, released last year: the introduction of a universal licensing regime for superannuation funds; the requirement for funds to obtain a specific prudential licence from APRA, rather than the Australian Securities and Investment Commission (ASIC); giving APRA a standards-making and enforcement power, similar to that which exists for other sectors it supervises; development by APRA of prudential standards covering investment activities of funds, portfolio strategy, asset allocation and risk concentration; link existing capital requirements more tightly to the size of funds and risk they incur, in particular, imposition of capital requirements on funds without approved trustees given they now face no capital requirement; a reassessment of governance arrangements for superannuation funds and trustees. Mr Bell said: “Some of these options may involve additional short-term compliance costs for funds whose activities are not subject to prudential oversight.” “Overall, the ABA believes the new regime should provide a tailored approach to supervision of superannuation, with most based on prudential policy statements and practice notes rather than detailed prescriptive law. This regime be will less expensive for the industry.” “The effects of the new regime outlined would be enhanced by the introduction of fund choice and full portability, along with further community education by both industry and Government.” The ABA’s submission has been lodged with the Federal Government’s Superannuation Working Group which will begin round table consultations on superannuation safety issues on 6 March, 2002. The ABA is looking forward to participating with the Superannuation Working Group on Superannuation. The ABA supports these consultations because they will be of considerable assistance in developing workable solutions. For further information contact: Heather Wellard ABA PR Phone: 02 8298 0411 Mobile: 0409 830 439  ENDS