The Australian Prudential Regulation Authority (APRA) has called on superannuation trustees to do more to safeguard members’ investments in platform products following the A$500 million (US$331 million) collapse of two investment schemes.
APRA has written to trustees to explain the findings of, and actions arising from, its review of the fast growing $397 billion platforms market, which represents 13.1% of APRA-regulated fund assets.
The letter calls on trustees to lift standards, outlines APRA’s observations about industry practices and requires them to confirm Financial Accountability Regime accountabilities, consider if they have breached prudential standards and obligations, and plan actions to lift standards.
APRA Deputy Chair Margaret Cole said the availability of the First Guardian Master Fund and Shield Master Fund managed investment schemes on platforms had exposed members to the risk of significant loss and uncertainty.
Investors have lost more than $500 million in their collapse.
Noting a variation in practices across platform trustees, APRA called on all platform trustees to address weaknesses and accelerate efforts to lift standards.
Cole said APRA would escalate supervision intensity to ensure that appropriate steps were being taken by trustees.
“We will not hesitate to take robust regulatory action as necessary,” Cole said in a media release.
Although many parties could be involved in the distribution of products via platforms, trustees were accountable for determining if an investment was suitable and ensuring the platform supported good outcomes for members.
“Importantly, trustees cannot outsource accountability,” APRA said.
