The Association of Superannuation Funds of Australia (ASFA) is warning the Australian Prudential Regulation Authority (APRA) that the recently-gazetted licensing fees to be paid by superannuation fund trustees may act as a barrier to entry by superannuation funds.
In a submission to APRA this month, ASFA Chief Executive, Philippa Smith says there is major concern within the industry at the licensing fees.
“To remain in operation, a superannuation fund will be required to pay a one-off licensing fee to APRA of between $20,000 and $3,500 depending on the size and status of the trustee,” Smith says. “Our members are deeply concerned about these fees.”
She says that while ASFA understands the level of fees are a matter for Government, there is considerable scope for APRA to help in the setting of more appropriate licensing fees and communicating better with superannuation fund trustees on the issue.
“ASFA’s concerns relate primarily to the costs to APRA of the licensing process and the amount sought to be recovered by licence fees, barriers to entry and continued existence of funds brought about by high licence fees, and the extent of consultation with the sector in regard to the fees imposed,” Smith says.
The ASFA submission questions the level of costs actually likely to be incurred by APRA in implementing the new licensing regime and suggests they will be much less than the $8 million to $15 million indicated in the Explanatory Memorandum attaching to the legislation.
“While presumably any over-recovery will result in an adjustment to ongoing supervisory levies, any over-recovery runs the risk of creating significant barriers to entry by new funds and will create inappropriate signals to existing funds to close,” the submission says.
