The Australian Prudential Regulation Authority (APRA) has provided some insights, and a time line, on how it plans to implement the proposed new licensing regime for super funds.
Speaking at the Association of Superannuation Funds of Australia (ASFA) conference in Brisbane recently, APRA executive general manager Charles Littrell said: “We anticipate releasing our views on licensing requirements and processes by early 2003, with comments due back to APRA in March or April 2003.
“Trustee expressions of intent to be licensed will be due by October 1, 2003. From this point there will be a two-year period during which APRA will undertake the initial licensing exercise.”
The proposals to licence all super funds were part of the Government’s recently announced reform package to improve the safety of super, and have yet to be passed by Parliament.
To help implement this package, Littrell said APRA was currently considering the pros and cons of creating more than one licence tier.
“In particular, APRA may propose a basic tier for corporate funds with a single employer sponsor, where services are limited to relevant employees and retirees,” he said. “Such a licence may limit the scope for adventurous investments, and apply firmer controls to outsourcing.”
But while this licence would be simpler, super funds could apply for another licence tier which allowed more flexibility, but had higher standards associated with it.
According to Littrell, APRA would initially focus on licensing public offer and larger funds to quickly bring the bulk of Australia’s super money under the new regime. From October 1, 2003, all new funds would need to be licensed before they started business. After that APRA might accelerate licensing — or in fact its refusal of licences — for problem funds or trustees.
“And finally, we plan to deal with our approximately 2,500 medium and smaller-sized funds in sequence with their scheduled on-site inspections,” Littrell said.
