The financial watchdog copped a hammering in a series of reviews for its inaction on superannuation, but now wants more powers to penalise dodgy super funds.
The Australian Prudential Regulation Authority is set to be given more ability to oversee superannuation.
Former consumer watchdog boss Graeme Samuel, who led a review into APRA, has recommended changes to make sure the regulator focused on consumers, not just making sure super funds make money.
“The panel believes that APRA has under-resourced superannuation and not approached it with an appropriate regulatory focus,” the review said.
“Member outcomes and superannuation have often taken a ‘back seat’ — as they rarely raise financial stability issues.”
APRA chair Wayne Byres told reporters he would need more funding and powers to operate effectively in superannuation.
“We’ve got less levers to play with in the super sector. We will have to think differently about how we deal with those,” Mr Byres said on Wednesday.
A Productivity Commission review found APRA focused on superannuation funds and their interests rather than the needs and interests of members.
The banking royal commission also criticised APRA for dealing with dodgy superannuation funds behind the scenes, when a more open approach would have helped members more.
Superannuation Minister Jane Hume says the federal government is preparing to update the laws to give APRA the tools it needs.
“That may include additional powers and penalties to be able to effectively regulate the sectors for which it is responsible,” she told reporters in Melbourne.
But Senator Hume would not commit to extra funding for APRA, saying only that requests would be considered ahead of next year’s budget.
The recommendations drew a mixed response from the superannuation industry.
The Association of Superannuation Funds of Australia supports overhauling APRA’s capabilities, but said shifting the regulator’s focus from long-term stability to short-term performance measures risks damage if not implemented “carefully”.
Industry Super Australia welcomed calls to embed and publish performance benchmarks for superannuation funds and to allow APRA to take action on underperforming funds.
“(The review) confirms what the royal commission already told us – that consumers have not only been let down by the institutions that perpetrated the misconduct, they have ultimately been let down by the regulator,” ISA acting chief executive Matthew Linden said.