AUSTRALIA - The Australian Prudential Regulation Authority (APRA) needs to keep a sharp eye on the trustees of pension funds, according to a parliamentary committee chaired by John Watson.
Calling for tighter regulation of superannuation funds, Watson said that APRA must improve its oversight of trustees, particularly those in the small to medium size superannuation funds.
“Someone must ensure that trustees abide by the standards required to protect fund members’ interests”, he said.
He was referring to the committee’s report on prudential supervision and consumer protection for superannuation, banking and financial services, tabled in the senate.
Other recommendations in the report included:
- APRA working more quickly when matters come to its attention, and not passing them on to another regulator;
- annual reports to superannuation fund members must provide more information about payments to trustees, significant administration fees, charges and commissions to fund and investment managers;
- a trustee, fund manager or administrator who has been convicted of fraud should not practice again unless certain conditions are met;
- APRA maintain a listing of trustees and others connected with funds that have been defrauded, whether or not APRA regulates those funds.
Watson said: “The Committee was particularly concerned to hear from many people who had lost significant amounts of money through poor investments by their superannuation funds.
“If the regulators had intervened at an earlier stage, this might not have happened.”
It was also noted that the financial services and regulation minister - who can grant financial assistance to a fund that had suffered as a result of misconduct - must act quickly in appropriate cases so that potential hardship to members was minimised.
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