The Australian Prudential Regulation Authority (APRA) has urged superannuation trustees to expedite their efforts in protecting members’ investments held within platform products. This call to action follows several significant events, including APRA’s thematic review of platforms, which was hinted at in its 2024-25 Corporate Plan and was initiated earlier this year. The review encompasses platform trustees managing nearly 95 per cent of superannuation platform assets.
In a letter released today to platform trustees, APRA has articulated its primary findings and mandated actions stemming from this review. Key concerns include calls for trustees to elevate standards in areas such as onboarding, ongoing monitoring, and enhancing member outcomes. Additionally, APRA has shared observations on both deficient and exemplary industry practices.
APRA’s correspondence also requires trustees to affirm their commitments under the Financial Accountability Regime (FAR), assess potential breaches of prudential standards, and formulate a timely action plan to improve their operations. “The fact that First Guardian and Shield managed investment schemes were made available to members by some platform trustees has exposed members to the risk of significant loss and uncertainty,” said APRA official Ms Cole. She emphasised that while practices vary among platform trustees, all must address weaknesses and accelerate efforts to enhance standards.
Furthermore, Ms Cole indicated that APRA would intensify its supervisory scrutiny to ensure trustees are taking appropriate measures, stating, “We will not hesitate to take robust regulatory action as necessary.”
Platforms play a crucial role within Australia’s superannuation landscape, with members investing approximately $397 billion through these channels. This figure represents 13.1 per cent of all APRA-regulated superannuation fund assets and 28.1 per cent of the CHOICE sector assets. Investments through platforms are witnessing robust growth, increasing by around 14.5 per cent over the past year.
Platforms typically offer members a diverse array of investment options across key asset classes, including shares, term deposits, and interests in managed investment schemes. Members generally select these options with the help of licenced financial advisers.
Trustees are obligated under the Superannuation Industry (Supervision) Act 1993, alongside specific prudential standards, to exercise care, skill, and diligence regarding all matters affecting the fund. APRA plans to enhance relevant prudential standards in its ongoing oversight of platform trustees.
From 15 March 2025, these trustee obligations will be further reinforced by the commencement of FAR, which will be applicable to trustees, directors, and senior executives alike. APRA and the Australian Securities and Investments Commission (ASIC) have distinct yet complementary regulatory roles within the platform ecosystem. While APRA oversees adherence to prudential standards, ASIC recently confirmed it would spearhead enforcement actions related to Equity Trustees Superannuation Limited (ETSL).
This collaborative regulatory approach highlights the importance of maintaining robust governance and safeguarding members’ interests within Australia’s superannuation framework.
