The Australian Institute of Superannuation Trustees (AIST) has called for proper checks and balances in extending the powers of the Australian Prudential Regulatory Authority (APRA) under Stronger Super.
AIST is especially concerned in regard to the proposed ability of the prudential regulator to cancel the MySuper licence of a registrable superannuation entity (RSE).
"While the provision in the bill is similar to APRA's current powers in relation to RSE licences, the current legislative program proposes to greatly extend APRA's powers, and the extension of these powers should be accompanied by appropriate checks and balances," the institute said in a submission to the federal government on the recently announced Stronger Super changes.
"Cancellation of a MySuper authorisation (or an RSE licence) will result in lasting damage to a fund and the reputation of its directors, even if it is subsequently overturned. It should not be cancelled lightly, and there should be controls against the unreasonable exercise of this power."
It also argued that RSEs should be given a reasonable chance to correct any mistake that APRA had identified, before cancelling a licence.
"The determination, variation and cancellation of MySuper authorisations by APRA should be accompanied by greater protection for super funds, members and employers than is currently provided in the bill," it said.
In an earlier submission to APRA on its discussion paper on prudential standards for superannuation, the Association of Superannuation Funds of Australia (ASFA) also argued APRA's powers should not become too prescriptive.
"ASFA considers that the prudential standards should consist of high-level principles which are flexible enough to cater for different arrangements/models (ie, they should not be overly prescriptive)," the association said.
"In general, ASFA's position is that trustees should have policies and procedures in place to meet the principles outlined in the standards and these policies and principles must reflect the size, scale and nature of the organisation and their outcomes must be tested and reviewed.
"Our concern is that if the prudential standards are overly detailed/prescriptive, the industry will end up with a one-size-fits-all approach, which is neither efficient nor best practice. We note that this view is consistent with APRA's intended approach as outlined in the discussion paper."
The industry groups are becoming increasingly critical of the government's hotchpotch approach to releasing proposed legislation, which, at times, differs quite substantially from what has been discussed in the consultation process.
The AIST warned that might lead to the institute having to revisit its position on certain issues.
"The staggered release of the various elements of Stronger Super may have been driven by the tight implementation schedule, but it has not aided clarity or consistency," it said.
"As more details become available, AIST may have to revisit and recalibrate previous positions.
"AIST has identified a number of new formulations of words and concepts whose meanings are unclear and are not legally settled.
"The use of new terms should be avoided wherever possible, so that extensive, time-consuming and uncertain litigation is avoided, and the intent of the government's reform agenda is more clearly implemented."
