Enhancement for Superannuation Data Collections consultation response

This letter sets out the Australian Prudential Regulation Authority’s (APRA) response to feedback received on the proposed enhancements to its superannuation data collection relating to indirect investment costs and registrable superannuation entities (RSE) licensee financial statements. Draft proposals were released for consultation on 30 November 2023 (‘Discussion Paper’).

APRA’s response to the consultation feedback has been divided into two releases in order to prioritise the data required on investment costs and financial statements. APRA will release a second response package later this year, covering the remaining topics on investments, RSE licensee profile and RSE profile.

Consultation on the proposals closed on 31 March 2024, with 9 written submissions received in response to the proposals. APRA held two round-tables, met with industry working groups and also met with individual superannuation industry stakeholders and RSE licensees as required.

While submissions were generally supportive of the proposals to enhance the superannuation data collection, RSE licensees provided significant feedback relating to the structure and scope of the proposed indirect investment costs collection. Submissions also acknowledged that the proposed RSE licensee financial statements collection aligned to existing data collected and could be completed in parallel with the completion of annual financial statements. Following review of the feedback, APRA has revised the investment costs collection to align to industry practice, provided additional reporting instructions to clarify requirements and retained the RSE licensee financial statements collection as proposed.

The key concerns raised in submissions relating to the indirect investment costs proposals were:

• clarification on the fees and costs required to be reported and the degree of look-through required for service providers. Some submissions suggested that the look-through basis appeared greater than the reporting requirements in the Australian Securities and Investments Commission’s (ASIC) Regulatory Guide 97 (‘Disclosing fees and costs in PDSs and periodic statements’) (RG 97) and would be a burden to provide;
• investment management fees and costs are not always identified as direct or indirect fees or costs; and
• whether APRA could either align to the industry standard template used between investment managers and RSEs on RG 97 disclosure requirements, or review existing data reported to APRA on investment costs.

APRA has amended the reporting standard in response to this feedback to reduce reporting burden, by closely aligning to existing reporting in the industry standard template done to fulfil disclosures under RG 97. In particular, APRA has updated the standard to capture total investment fees and costs and total transaction costs instead of Indirect costs only; and clarified that the look through requirements broadly align with RG 97 reporting. APRA has provided additional time to report the data, extending the ongoing due date by 2.5 months. 

The key concerns raised in submissions relating to the RSE licensee financial statements proposals were:

• clarification that the RSE licensees’ financial statements which are currently lodged with ASIC and are publicly available are not sufficient to meet APRA’s data collection needs;
• clarification that ‘related party transactions’ reporting is intended to align to the existing financial reporting required of RSE licensees; and 
• that the structure of the draft reporting tables did not appear to recognise the different business models of RSE licensees across the industry.

APRA has retained this reporting standard as proposed. Instructions and associated definitions in the reporting standard have been enhanced to clarify that reporting requirements for related party transactions align to the financial statements. Guidance has also been updated with examples to clarify expected reporting requirements where data may not be available due to an entity’s business structure. APRA expects that the reporting will align with the RSE licensees’ financials and will interpret the data in the context of the RSE licensees’ business model.

APRA has included a summary of the key feedback and APRA’s response in Appendix 1.

A summary table of all proposals with any changes to the reporting standards proposed in response to feedback raised is in Appendix 2.

APRA has also included the final and marked up versions of the reporting standards as attachments to this letter (Attachments A to F), as well as a summary of all reporting tables, together with a mapping of any equivalent data concepts currently reported to APRA (Attachment G).

Next steps

APRA intends to determine Reporting Standard SRS 332.0 Expenses and Investment and Transaction Fees and Costs (SRS 332.0), Reporting Standard SRS 101.0 Definitions for Superannuation Data Collections (SRS 101.0) and Reporting Standard SRS 340.0 RSE Licensee Financial Statements (SRS 340.0) later in 2024.

APRA also intends to consult on confidentiality and publication proposals for Reporting Form SRF 332.1 Investment and Transaction Fees and Costs (SRF 332.1) and SRS 340.0 to then release updated publications in 2026.

If you have any questions, please contact DataAnalytics@apra.gov.au.

Yours sincerely,

Andrew Robertson
General Manager - Chief Data Officer
Technology and Data Division

Appendix 1 – Summary of key feedback and APRA’s response
 

Indirect investment costs (SRF332.1):

Scope and purpose of collection

APRA proposed this reporting standard to address a key gap in APRA’s data on investment expenses, to help provide comparable data on the true cost of investment management in RSEs and improve transparency of investment management costs. The proposal was to collect total annual indirect investment costs associated with each investment manager, which is required for compliance with the disclosure obligations of RG 97.

Submissions indicated that the instructions in the draft reporting standard were unclear on the fees and costs to be included and the degree of look-through required for service providers. Because of this, submissions requested further clarification in a number of areas.

Submissions noted that the draft instructions requested indirect investment costs be reported on a look-through basis, which appeared inconsistent with the intent of aligning the collection to RG 97 reporting obligations. Entities requested explicit guidance that costs are to be reported in accordance with RG 97 and that entities could utilise reasonable estimates, as permitted under RG 97.

One submission questioned whether the required information could be generated from existing reporting standards such as Reporting Standard SRS 705.0 Components of net return (SRS 705.0) or whether APRA could seek alternative options to gather data, such as directly from investment managers. 

Multiple submissions noted that RSEs collect RG 97 fee and cost data from industry standard templates sent to each investment manager and suggested that aligning the collection to this process and data would be a simpler solution for RSEs. In addition to this, one submission further recommended that the proposed standard be refined to collect total investment and transaction costs, consistent with the RG 97 reporting obligations. 

APRA considered alternative reporting options to meet the objective of quantifying total investment management costs in aggregate and associated with each investment manager. The industry suggestion of utilising data collected under SRS 705.0 was assessed and considered unable to meet the reporting requirement in its current design because data is not available for individual investment managers. 

APRA will retain the reporting standard and simplify the design based on industry feedback and recommendations. The reporting standard will be refined to capture investment fees and costs and transaction costs to align it to the RG 97 disclosure requirements and data already captured and collated by RSEs. 

In response to the submissions’ request for clarification of the reporting requirement, APRA confirms that the intended scope of the collection is to align to data collected by entities to meet their RG 97 obligations in relation to disclosing fees and costs in PDSs and periodic statements. For superannuation platform operators, APRA expects that trustees should also utilise fee and cost information required to meet reporting obligations under SRS 705.0 in relation to accessible products available on superannuation platforms. 

Data availability

A number of submissions raised concerns that depending on the form and level of granularity of data required by APRA, they may have difficulties in obtaining and reporting data. These submissions assumed a greater level of data granularity than intended in the proposed collection.

Submissions indicated that there are a number of gaps with standard templates used with investment managers to collect fee and cost data. These include fees and costs for individual service providers engaged by the investment manager, as well as identifying whether such investment management fees and costs are direct or indirect. Industry feedback was that building in such requirements into standard templates would add to reporting burden for themselves and investment managers. 

Submissions noted that the proposed annual reporting due date of 30 September would be challenging under the proposed standard design, due to the requirement to collate data from investment managers and undertake additional calculations. Some submissions indicated that the RG 97 data collection process is typically finalised in early September, although some entities have provided further feedback that for superannuation platform providers this process may not be completed until November.      

Entities also requested further guidance in the table instructions and definitions for certain data items, namely ‘Asset Class Sector Type’ and ‘Investment Average Market Value Reporting’.

APRA will refine and simplify the reporting standard as noted above under ‘Scope and purpose of collection’, by aligning it to the RG 97 disclosure requirements and data already captured and collated by RSEs. Industry feedback indicates that this would enable entities to develop systems and processes to synchronise this with their current RG 97 processes. This approach also addresses industry concerns about additional reporting burden in respect of investment manager data, since it does not require investment managers to report at their individual service provider level. 

APRA has aligned the reporting year to the June 30 year end consistent with annual reporting under SRS 705.0. APRA will also revise the annual reporting due date from 30 September to 15 December. The revised reporting standard will include additional instructions to clarify reporting requirements for the data items requested in the industry feedback.

Data confidentiality

Submissions indicated concerns about APRA publishing potentially commercially sensitive information on investment manager fees and costs.

APRA will consult on confidentiality and publication for SRF 332.1 after the reporting standard has been determined and consider issues such as commercial detriment as part of that consultation. 

RSE licensee financial statements (SRS 340.0)

Collaboration with ASIC

APRA proposed to collect data on an annual basis for the RSE licensee’s financial year, with reporting timeframes aligned to RSE licensees’ existing financial statement lodgement requirements to ASIC. The data required mirrors (at a minimum) the financial reporting required for ASIC and will be shared with ASIC.

Submissions indicated general support for the proposal, with some submissions noting it draws upon data already available and produced as part of the completion of annual financial statements. Comments noted that it can be completed in parallel with that process. However, one submission requested that APRA clarify the purpose for the collection as the information is already published in the financial statements, lodged with ASIC and publicly available.

APRA will retain this reporting standard as proposed. APRA’s intent with this reporting standard is to collect data on RSE licensees’ financial statements in a structured and standardised format to allow analysis and comparison across entities in accordance with the Australian Accounting Standards (AAS). Current financial statements lodged with ASIC are not captured in a way to enable such analysis. 

Reporting instructions for different RSE licensee business models

APRA proposed to collect data in a standard format to allow analysis and comparison across entities. In creating a standardised format, reporting tables contain some data fields which are not applicable for all RSE licensee business models. 

Submissions indicated that clarification was needed on how entities should complete reporting tables where data fields were not relevant to their structure of business. Examples provided in one submission included where revenue or expense data is not available at the level of granularity requested, or where trustee risk reserves are not held on the RSE licensee’s balance sheet. 

APRA will update instructions in the reporting standard to clarify that entities are to report data according to what can be categorised within their financial accounts, and where APRA expects a minimum level of granular reporting would be available. For example, APRA expects that where RSE licensees generate revenue from multiple sources such as provision of trustee services, reserve fees and interest income, that these revenue items would be reported under the relevant categories that would be in line with AAS. Instructions will include illustrative examples to indicate how entities should report data under different scenarios considering AAS requirements.

Related party transactions

APRA proposed to collect data on all related party transactions, as disclosed in the RSE Licensee annual financial report, which occurred between the RSE licensee and related parties for the relevant reporting period. Consistent with the rest of the reporting standard, the intent of the related party transactions table is to capture data already reported in the RSE licensee’s published financial statements and in accordance with the relevant AAS. 

Submissions indicated that the ‘Related Party’ definition in SRS 101.0 and used for expenses data collection in SRS 332.0 is broader than the definition of ‘related party’ in Australian Accounting Standard AASB 124 Related Party Disclosures (AASB 124). Clarification was sought on whether APRA required transactions reported to align with AASB 124 or the broader definition used in SRS 332.0. A further request was to clarify how entities would report payments received by the RSE licensee.   

APRA will revise the instructions and associated definitions in the reporting standard to confirm that entities are to report related party transactions in accordance with the AASB 124 definition of related parties, consistent with the intent that reporting is to align to the RSE licensee’s published financial statements. The related party transactions table requires RSE licensees to report payments to and from the RSE licensee. Instructions will be revised to clarify this. With respect to potential data differences between SRS 340.0 and SRS 332.0, APRA notes that these reporting standards are not directly reconcilable due to their different structure and methodology:

• SRS 332.0 reports RSE data using APRA look-through; and
• SRS 340.0 reports RSE licensee data on a non look-through basis.

APRA will assess data differences and consider options such as explanatory notes to publications as part of the consultation on proposals for the publication of data after the reporting standard has been determined.

Guidance and definitions for completion in accordance with Australian Accounting Standards

APRA proposed that entities report data in accordance with AAS and sought feedback from industry on whether the instructions and definitions in the draft reporting standard were sufficient or whether more detailed AAS references for specific financial metrics would be beneficial. The feedback was sought to help ensure that APRA’s taxonomy meets both industry and agency needs.

Submissions and subsequent follow up with industry participants did not indicate a requirement for more detailed specific AAS references in the reporting standards, although some participants cited the usefulness of increased detail when referencing AAS standards.

APRA will retain the existing level of guidance in the reporting standard whilst providing more detail in the Taxonomy Artefacts to assist entities in compiling their submission data.

Appendix 2 – Summary of final positions
 

Attachments

Attachment A
 

Attachment B

Attachment C

Attachment D

Attachment E

Attachment F

Attachment G