The Australian Prudential Regulation Authority (APRA) has specifically backed reversing the legal onus of proof with respect to superannuation funds and the best financial interests duty.
In a submission to the Senate Economics Legislation Committee review of the Government’s controversial Your Future, Your Super legislation, APRA has clearly stated that the reversal of the evidentiary burden of proof will focus the minds of superannuation trustees.
“The reversal of the evidentiary burden of proof (which is part of the BFID measure) will also further focus trustees’ minds on the evidence they must have and the records they must keep to show they have acted in the best financial interests of members at all times,” the APRA submission said.
The regulator’s position stands in stark contrast to that of plaintiff law firm, Maurice Blackburn which described the reversal of the burden of proof as “regulatory overreach”.
“This measure bolsters the requirements already introduced through SPS 515, building on penalty provisions recently introduced, which require trustees to ensure that their significant expenditure decisions are for the purposes of the sound and prudent management of its business operations and consistent with the best interests of beneficiaries,” the submission said.
APRA said in the submission that it was currently undertaking a broad review of trustee expenditure, looking at a range of different types of expenditure arrangements across all sectors of the superannuation industry.
“This review is considering the framework and decision-making process of boards pertaining to certain areas of expenditure, including a review of the metrics and approach to assessment of benefits to members,” it said.
“If we conclude that fund expenditure by a particular trustee may not be consistent with the best interests of members or the sole purpose test, appropriate supervisory and/or enforcement action will follow. We are also seeking to identify both areas of good practice and areas where there is room for improvement, and expect to inform industry about our findings on an aggregate basis within the next year.”
