Speech by ob体育 Commissioner Danielle Press to the AIST Conference of Major Superannuation Funds, 7 September 2022.聽
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Good morning and thank you to the Australian Institute of Superannuation Trustees for inviting me to speak. It is great to join you today in Brisbane, alongside my APRA and ATO colleagues.
I would like to begin by acknowledging the traditional owners and custodians of the lands on which we meet today, and to pay my respects to their elders past, present and emerging. I extend that respect to Aboriginal and Torres Strait Islander people present today.
The superannuation system in Australia is ever-changing and becoming increasingly complex. This is being driven by rapid technological developments, evolving risks like cyber and climate risks, law reform, and changing consumer expectations.
This brings with it opportunities for the super industry to continue to mature.
In the time I have today I want to talk to you about ob体育鈥檚 priorities, particularly our work in super. Importantly, I want to give you a sense of what you can expect from us over the next five years before taking your questions.
ob体育鈥檚 priorities
Last month we released our 2022鈥�26 Corporate Plan. It sets out our core external and internal priorities, and the action we plan to take to give effect to those priorities now and over the next four years.
ob体育鈥檚 four external strategic priorities are to:
- reduce the risk of harm to consumers caused by poor product design, distribution, and marketing, especially by driving compliance with new requirements;
- support market integrity through proactive supervision and enforcement of governance, transparency and disclosure standards in relation to sustainable finance;
- focus on the impacts of technology in financial markets and services, drive good cyber-risk and operational resilience practices and act to address digitally enabled misconduct, including scams.
- protect consumers, especially as they plan and make decisions for retirement, with a focus on superannuation products, managed investments and financial advice.
Supporting our priorities are a set of core strategic projects focused on sustainable finance practices, crypto-assets, scams, cyber and operational resilience, breach reporting, design and distribution obligations and, subject to the passage of legislation, the Financial Accountability Regime.聽
Many of these matters won鈥檛 be dealt with overnight. They will be enduring priorities for us, and I know many of you are already responding to these issues.
Superannuation focus areas
I鈥檇 now like to turn to our focus areas in super.
Against the backdrop of change, our principal expectation of the super sector remains the same. You need to be sophisticated and mature in how you develop, govern, monitor, and market super products, placing your members in the centre of your decision making.
This means taking a consumer-centric approach to product design and distribution, in-line with the new obligations. It means investing in the right systems and processes, technologies and uplifting your data analytics, and governance arrangements. It鈥檚 not just about complying with the law.
There are three key areas you should be focused on now, and over the next five years.
- First, there鈥檚 a genuine opportunity to capture and harness the data in the super system to better understand the financial future of Australians and what we can all do to help safeguard it.
- Second, further maturity in the super sector will involve reflecting on the consequences of the fund鈥檚 actions, including what happens when things go wrong. I encourage you all to think about how to respond to consumer harms should they emerge. This means further developing the way in which your organisations engage in identifying breaches of the law, internal-dispute resolution (IDR) mechanisms and improving remediation practices.
- Third, as significant participants in Australia鈥檚 financial markets, you need to consider your conduct, keeping in mind trustees鈥� obligations relating to market integrity.
Importantly, ob体育 is also undertaking reviews about the distribution of choice products, the retirement income covenant, performance test failure communications, insurance in superannuation, trustee oversight of advice fee deductions and trustee transparency.
And ob体育 and APRA will continue to work closely together, particularly on areas of common interest, such as the performance test, retirement income covenant, and the Financial Accountability Regime.聽聽
All of these should be areas that funds are already thinking about.
Looking ahead
With new and significant obligations and responsibility, we acknowledge trustees have a lot to grapple with.
Responding to these issues requires high standards of governance to be exercised by senior executives, boards and chairs. This is especially critical given the size and impact represented by the funds in this room.
There are other fundamental considerations too.
Trustees need to be able to demonstrate that decisions are consistent with the best financial interests of their members.
As the conduct regulator, we remain focused on the behaviour of superannuation trustees to improve consumer outcomes. We will continue to look at how trustees are dealing with consumers 鈥� is it fair? Does it meet the needs of members? Does it promote confidence in the system?
Earlier I said that our principal expectation of super funds remained the same. The other constant 鈥� now and over the next five years and beyond 鈥� is our willingness to take enforcement action where funds fall foul of the law.
As ob体育 Chair Joe Longo recently remarked, 鈥極ur appetite to take on matters has not diminished. Where we see egregious misconduct, we will act. Our action will be targeted, timely and proportionate鈥�.
When deciding what action to take, we consider a range of factors, including the nature and circumstances of the suspected misconduct. We also consider how a trustee interacted with us in relation to the suspected misconduct.
This brings me to my final point, how trustees interact with ob体育 matters. I strongly encourage trustees to engage in open and transparent dialogue with ob体育 鈥� if there are serious concerns and a civil penalty action against the trustee, this may be taken into consideration by Courts.
I look forward to your questions and a lively discussion with APRA.