APRA 'concerned' by AMP and NAB super evidence
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APRA 'concerned' by AMP and NAB super evidence

The powerful financial regulator is considering taking action against the superannuation arms of National Australia Bank and AMP after revealing it is "concerned" by evidence given at the royal commission.

The Australian Prudential Regulation Authority (APRA) also signalled it was still looking into the behaviour of IOOF, saying it was pursuing the financial services giant after demanding minimum governance changes in recent months.

The role of trustees was a key theme of the Hayne royal commission's hearings on super.

The role of trustees was a key theme of the Hayne royal commission's hearings on super.

Photo: Fairfax Media

After last month's hearings on super scrutinised whether trustees in for-profit funds are fulfilling their obligation to act in customers' interests, APRA highlighted the potential gap between how trustees saw their role and the regulator's view.

APRA noted in a submission on Monday that it was not questioned about the conduct of National Australia Bank's trustee, NULIS, or the case study involving AMP, when its deputy chair Helen Rowell fronted the inquiry last month.

"However, APRA has been concerned by some of the oral and documentary evidence that emerged in the course of those case studies, in particular regarding how the individuals giving evidence saw their roles, the arrangements with related parties and the roles of the RSE [registrable superannuation entity] licensee generally," its submission to the royal commission said.

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APRA, which also defended its approach to enforcing super laws, said it would "carefully evaluate" the evidence and the submissions from counsel assisting the royal commission, and compare this with what it had previously been told by NULIS and AMP.

APRA said it would seek further information from the super businesses to determine the facts and "the need for further action by APRA".

APRA also said it had looked closely at the royal commission's revelation that Suncorp's superannuation arm had used tax refunds to purchase services from other parts of the financial conglomerate.

The regulator said it was considering the matter further, but its "prima facie" view was that parts of this arrangement "may not be consistent" with its prudential standard that deals with outsourcing.

A key theme of the recent hearings was the conflicts surrounding trustees, and the competing demands they face from members and their parent companies.

Another recurrent theme of the hearings was APRA's approach to policing the sector, with counsel assisting questioning Ms Rowell over its decisions on whether to take super matters to court  - of which there have been very few.

In the case of IOOF, which the commission heard had effectively compensated customers with their own money, APRA said it had given careful consideration to taking legal action over the issue, but decided against it.

Though it did not take court action, APRA said it was ramping up its focus on "structural issues" at IOOF, and in June it called for "minimum governance and structural changes". APRA said it did not regard this matter as closed, and was pursuing further changes from the company.

APRA's submission said it accepted there were "legitimate questions" as to whether taking court action would lead to wider deterrence, but it defended using the threat of action.

"In APRA’s view, having the power to take litigation or other action is important to achieve the necessary changes and responses from entities without necessarily having to take that action in all cases," the submission said.

APRA defended its decision not to take action over funds taking "grandfathered" commissions from super, because it said these were allowed by the law. Similarly, it defended its approach to funds that took several years to move members' money to low-cost MySuper funds, albeit within a legal deadline. APRA said it did not think "it would be appropriate for APRA to sanction a trustee for actions allowed by law."

Clancy Yeates writes on business specialising in financial services. Clancy is based in our Sydney newsroom.

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