Despite being a growing reservoir of funds under management, this critically important pool of capital is confronting mounting problems collating and disseminating key data in a timely manner.
The ratings house is pinning its growth strategy on a revamped methodology that increases the emphasis on governance to 25 per cent – a timely move considering APRA’s proposed reforms.
Fund trustees baulk at increasing regulation
(Pictured: Daryl Crich)
Super fund trustees and executives appear to be getting a bit stroppy about the amount of regulation by which they are governed, which, they mostly believe, will become more onerous over the next 10 years, according to a survey conducted jointly by Australian Institute of Superannuation Trustees and custodian BNP Paribas Securities Services.
Results of the survey are scheduled to be released at this week’s Conference of Major Super Funds on the Gold Coast, March 18-20. Some preliminary findings have been made available.
The survey shows that more than 70 per cent of respondents expect there to be even more regulation of the industry in 10 years time and that about 40 per cent believe that regulatory change will still be one of the biggest risks for the industry.
According to Daryl Crich, BNP Paribas’ chief administration officer, an overwhelming majority of respondents cited regulation as being the greatest factor in stifling innovation and progress in their fund.
He said industry participants were most concerned about increasing government tinkering and regulation and expected this to continue to pre-occupy the industry.
The survey results include various anonymous comments from fund trustees and executives. These include:
> “They [regulators] have gone beyond their original mandate as being a prudential regulator”
> “[Regulators should adopt] a more compliance management approach rather than enforcing risk management until it hurts’
> “[Regulators should] work more actively with international regulators to better mitigate risk inherent in international financial markets”
> “Smaller funds are in touch with their member base and know what they need and require but are stopped by APRA regulation. The cost of implementation has been an issue”, and
> “Currently, there is a sense that regulators don’t really understand the super industry and how it is different from banks, insurance companies etc., with the result that new regulations can be harmful to our business, for example portfolio holdings disclosure and fee disclosures. By 2025, I would like to hop that government and regulators understand the super business better…”
Tom Garcia, AIST’s chief executive, said it was no surprise that some respondents to the survey worried that the Government would increasingly look at super as a source of revenue in the years to come.
“The research shows that the industry has significant concerns about the regulatory change in the next 10 years – another compelling reason for the need to define the objectives of super and set a strategic plan for the industry,” he said.
Meanwhile, BNP Paribas announced last week that it had won the tender for securities servicing of the $2.2 billion First Super fund. The incumbent was NAB Asset Servicing.
