Superannuation regulatory update

With super funds in the throes of sending members annual statements, APRA and ASIC have directed pointed communications of their own to trustees.

For other sectors, the message is clear – financial regulators are not only monitoring but also looking to actively enforce licensees’ compliance with their obligations.

APRA puts MySuper products to the test

APRA has released the results of the second MySuper performance test, for which it assessed 69 MySuper products with at least five years of performance history. While 96 per cent of MySuper superannuation members are now in a performing MySuper product, five products failed to meet the benchmark this year.

Trustees of the product that failed for the first time must notify their members of the result by 28 September 2022; the four products that failed the test for a second time are now closed to new members. Five products that failed last year’s performance test passed this year.

APRA Superannuation Head, Margaret Cole, said the result was “the culmination of APRA’s intensified supervisory approach, driving trustees to take meaningful action to improve member outcomes”.

The annual performance test was introduced last year to protect members from poor outcomes and hold trustees accountable for the implementation of their investment strategy.

ASIC targets superannuation TMDs

ASIC is calling on superannuation trustees to review and if necessary improve the effectiveness of target market determinations (TMDs) for their products. It found some poor practices through a review of a sample of 55 TMDs prepared by 27 superannuation trustees.

“As product issuers, it is the fundamental responsibility of trustees to know their product offering and who it is right for. Trustees should clearly define their target markets and review triggers in target market determinations using objective, specific and measurable parameters,” said ASIC Commissioner, Danielle Press.

In its observations, ASIC made recommendations regarding several TMD aspects, including defining target markets, describing investment sub-markets, setting review triggers, setting review periods, and distributor complaint reporting.

TMDs are a key component of design and distribution obligations (DDOs), which commenced on 5 October 2021. DDOs require firms to design financial products to meet the needs of consumers and to distribute their products in a more targeted manner.

For the complete list of what ASIC, AUSTRAC, Treasury and APRA have been up to lately, head to our Regulatory News page.  

Related Learning

• RG146 Superannuation
• Design and Distribution Obligations
• Marketing and advertising financial products RG 234
• RG146 CPD