Industry associations have supported the prudential regulator’s open letter to super fund trustees regarding the valuation of unlisted assets.
Both the Investment and Financial Services Association (IFSA) and Australian Institute of Superannuation Trustees (AIST) have welcomed the Australian Prudential Regulation Authority’s (APRA’s) stance on the issue.
Outgoing IFSA chief executive Richard Gilbert said upholding the “integrity and transparency” of valuation and disclosure practices is needed to maintain market confidence.
Gilbert also said when calculated properly, unit prices are a “true reflection” of the value of a superannuation scheme, ensuring members leaving or entering the scheme don’t benefit unfairly over others.
AIST chief executive Fiona Reynolds also welcomed the APRA guidelines, saying the industry body appreciates any move to “solidify best practice standards” on this issue, particularly when “unlisted assets play a significant role in some superannuation portfolios”.
Reynolds said while most funds have “robust” valuation policies and practices in place, the APRA guidelines remain “timely and appropriate” in light of current market conditions.
“Importantly, these guidelines recognise the diversity of unlisted assets and provide trustees with the flexibility to adopt appropriate valuation methods,” Reynolds said.
“APRA has recognised the existence of other independent valuation guidelines, many of which are already widely followed by super funds.”
Last week APRA weighed in on the valuation of unlisted assets within superannuation funds after a considerable period of industry debate on the issue.
The regulator sent a letter to superannuation trustees to clarify its expectations on the matter, which include obtaining frequent revaluations from appropriate sources.
APRA also outlined a number of “unacceptable valuation practices” it has observed taking place in some super funds.
