The Australian Prudential Regulation Authority (APRA) has signalled that it will be taking a much closer supervisory approach with respect to service providers and industry advisers.
In its submission to the Parliamentary Inquiry into the Structure and Future Operation of the Superannuation Industry, the regulator said it expected to have more ongoing interaction with industry advisers such as auditors and actuaries in areas such as the audit of trustee risk management statements and the risks management plans of funds.
It said that, looking further ahead, current supervisory practices would be expanded to cover the operations of service providers and the risks to which they expose fund members.
“Outsourcing of material business activities such as administration and investment management is the norm for many trustees,” the APRA submission said. “The importance of the relationship between licensee and service provider has been recognised in the outsourcing operating standard. The standard requires this relationship to be conducted on a commercial basis and for APRA and the licensee to be given access to the premises and records of the service provider.”
The submission said APRA did not expect to undertake any extensive analysis of outsourcing issues in the superannuation industry until next financial year due to its current workload.
