APRA and ASIC host Superannuation CEO Roundtables - March 2024

APRA and ASIC held Superannuation CEO Roundtables on Wednesday, 27 March and Thursday, 28 March 2024. The theme of these discussions was resilient and member-focused fund operations.

Hosted by Simone Constant, Commissioner, ASIC and Carmen Beverley-Smith, Executive Director, APRA, the Roundtables were attended by 20 superannuation chief executive officers (CEOs) and other executives, representing a broad cross-section of the industry across two separate roundtables (see Appendix I for the full list of attendees).

Resilient and member-focused fund operations
 

APRA and ASIC are working collaboratively to promote resilient and member-focused fund operations. APRA is committed to supporting superannuation trustees in their efforts to uplift their operational resilience, and ASIC is dedicated to ensuring member services are delivered efficiently, honestly and fairly. Both agencies are strongly committed to ensuring Australians are confident the superannuation system will support them in retirement.

The work on operational resilience is foundational and necessary for supporting robust fund operations, and both agencies encouraged trustees to maintain a strong focus on the interactions members have with their funds in undertaking this work. Regulatory changes under the Financial Accountability Regime (FAR) and Prudential Standard CPS 230 Operational Risk Management (CPS 230), in addition to the current Prudential Standard CPS 234 Information Security (CPS 234), will strengthen trustees’ ability to swiftly respond in times of stress. The implementation work undertaken by trustees also provides an opportunity for improvement of their day-to-day servicing of members.

The CEOs discussed the importance of jointly considering FAR and CPS 230 to prevent duplication of work and promote clear accountability. Integrating these considerations into existing requirements is driving efficiencies and fostering a deeper understanding of the end-to-end member experience. The CEOs acknowledged that mapping these accountabilities has allowed business units to develop a clearer understanding of their processes and gain insight into how they operate together. Trustees acknowledged the need to identify process risks and the impact their respective controls and mitigation actions can have on the member experience as part of preparation and implementation of FAR and CPS 230. A number are already addressing this.

The CEOs noted that among the challenges identified by trustees was the receptiveness of service providers in responding to revised requirements driven by regulatory changes. Moreover, trustees and service providers have different approaches to regulatory requirements that can hinder collaboration. The CEOs observed that industry could work with service providers to standardise approaches and help streamline regulatory change implementation.

APRA and ASIC noted that the changing regulatory landscape is not unique to Australia. In the United Kingdom, for instance, reforms are being developed to address transparent and comparable service standards, as well as fees and performance. The regulators also identified opportunities for trustees to engage with other Australian financial institutions to improve accountability measures, including engaging with banks, which prior to FAR, operated under the Banking Executive Accountability Regime since 2018.

The CEOs acknowledged that CPS 230 is providing opportunities to strengthen the management of operational risk for service providers, and are considering the potential benefits and challenges of maintaining outsourced administration or moving some or all of these functions in-house. They indicated that the market dynamics, regulatory expectations, member preferences, and technological innovations would be key influences on their decision-making.

APRA and ASIC agreed that trustees can promote resilient and member-focused operations by having robust end- to- end business processes that put the member at the centre of their decision making. Both agencies reiterated the importance of fostering a strong risk culture of transparency, accountability, and consistency to drive these regulatory changes and improve member outcomes. Adopting clear accountability and designing and operationalising fit for purpose risk management frameworks, will enable trustees to better service members both on a day-to-day basis and in the event of disruption.

Appendix I – Attendees 27 March 2024

APRA attendees

ASIC attendees

Attendees 28 March 2024

APRA attendees

ASIC attendees