The Association of Superannuation Funds of Australia (ASFA) has told the Federal Treasury that it is concerned that substantial changes are being proposed to the powers of the Australian Prudential Regulation Authority (APRA) without adequate explanation.
In a submission responding to the Treasury proposal paper ‘Streamlining Prudential Regulation’, ASFA said it was pleased that a number of the concerns it had raised on behalf of members, particularly with respect to APRA and the Australian Securities and Investments Commission (ASIC) breach reporting requirements, were being addressed.
“However, we are very concerned that significant changes are being proposed to APRA’s powers without adequate explanation,” the submission said. “While these proposals may have merit, they require further exploration of the issues and consultation with industry.”
While the ASFA submission broadly endorsed a number of proposed changes to the existing regulatory regimes overseen by APRA and ASIC, the organisation raised serious concerns about the proposal to remove ministerial consent from appropriate administrative decisions.
The submission pointed out that such a change would enable APRA (and the Australian Taxation Office in respect of self-managed funds) to stop a superannuation entity from operating or freeze its assets without requiring the written consent of the Minister, as it currently requires.
“Ministerial consent does provide a final check on APRA before it makes a very important decision,” the submission said. “The Minister can offer a ‘sober second thought’ before an important decision is taken.”
The submission said removal of the ministerial consent provisions from the Superannuation Industry Supervision Act and their replacement with a merits review by the might be worth considering.
“However, we believe that given the magnitude of this particular proposal, significant changes to ministerial consent in superannuation should be subject to a more considered consultative process,” ASFA said.
