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MySuper insurance standards rejigged
The Australian Prudential Regulation Authority (APRA) will revisit a contested insurance issue as part of the MySuper application draft prudential consultation process.
APRA deputy chairman Ross Jones said it would change the standard to allow Registrable Superannuation Entity (RSE) licensees to seek income protection from players outside of the life insurance industry.
"Having considered this feedback and our objectives in originally proposing this restriction, we will change this standard," he said.
Jones said the standards' intent was to ensure trustees understand the risks associated with different providers, but conceded APRA's initial approach may have been too prescriptive.
He also said confusion abounded regarding the scale test, and small funds should not fear failing the 'scale test' based on size alone.
"APRA would have no concerns with a small fund that was performing well," Jones said.
He said APRA would not push back the date on the 1 July 2013 implementation date as some submissions had called for transitional provisions from 1-3 years.
Provisions already existed in the legislation, and come 1 July 2013, draft standards would have been out for a year, meaning many licensees would have no difficulty meeting the requirements, according to Jones.
"Rather than have some formal deferral written into the standards, we will maintain the timetable, but with an ability to provide flexibility where needed," he said.
While APRA was aware of industry concerns regarding the new responsibilities of RSE licensees and directors and a perceived lack of protection, Jones said as it was a legislative issue and APRA's hands were tied.
He said concerns regarding the reporting standards for Stronger Super would be nutted out after the release of a discussion paper on tranche 3 of the legislation in the coming weeks.
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