Superannuation funds should not be compelled to process rollovers within three working days but should instead act as quickly as practicable within 30 days, according to the Association of Superannuation Funds of Australia (ASFA).
Responding to the Australian Prudential Regulation Authority's (APRA's) draft prudential standards for superannuation funds, ASFA said the three working day rule for rollovers focused on receiving information "and not on the accuracy of the information, or any concerns around the identity of the person making the request".
ASFA said this approach assumed there would be no risk of fraud.
"That is, the rules operate on the presumption that, having passed the Australian Taxation Office's (ATO's) identification validation process, the assumption is that the person who is making the request is the person who owns the benefit," the submission said.
ASFA was also concerned that the three day rule "primarily targets members in existing default options and, going forward, in MySuper products, because other regulations treated investments in a choice option as an "illiquid investment and subject to an ‘as soon as is practicable but in no more than 30 days' rollover requirement".
The submission said the three working day rule for rollovers did not recognise existing and long-standing arrangements for forward unit pricing and would drive the industry towards the costly introduction of daily unit pricing processes — further entrenching short-termism in investment decisions.
ASFA also said it would limit the scope of investment arrangements that trustees could consider for MySuper products, to the detriment of members invested through those products.
