The publication of the annual superannuation bulletin by the Australian Prudential Regulation Authority (APRA) earlier this month was the cause of a bit more excitement than is usually the case with the release of statistical bulletins.
The reason for the stir was the regulator's decision to include an essay on the potential pitfalls of related party asset exposures by super funds.
APRA concluded that while trustees may believe that placing funds with related parties produces operational advantages, it can also introduce conflicts of interest that must be managed to ensure trustees continue to act in members' best interest and minimise 'leakage' from member investment returns.
A sore point for some was that the essay singled out retail funds as placing more money with their affiliates than corporate, public sector and industry funds do.
The reason for the publication of the essay was undoubtedly the Cooper Review's recommendation that APRA develop a prudential standard on conflicts of interest for trustees.
But it is a potential problem that should not be sneered at as the data indicates almost $300 billion of assets could be at risk of being managed inappropriately.
Therefore, it is all the more of a shame that the publication was largely a missed opportunity, as it excelled in vague data and broad generalisations.
What are deemed related party assets has been the subject of some discussion.
For example, earlier independent research into retail investments has been known to classify any money that goes through a company's platform as party related, even when it is placed with non-affiliated fund managers.
It would also be interesting to see whether the recent growth of the institutional boutique fund manager incubators and backers have influenced related party asset exposures.
When APRA was asked for clarification of the data the regulator did not quite say; 'dunno', but the shoulder-shrugging response was equally uninspiring.
It is true that APRA is restricted in publishing certain information due to confidentiality agreements, but if it is keen to start a serious discussion on conflicts of interest in managing superannuation assets it would help to provide a bit more substance and, dare I say it, transparency to the data published.
