With an air of noticeable contrition, the Australian Prudential Regulatory Authority is keen to advertise the things it has been doing to please the Hayne Royal Commission. To this end, its chairman Wayne Byers has published a list.

Noting his efforts "to help address an erosion of community trust in the fairness with which customers have been treated" and promising "integrity, collaboration, accountability, respect and excellence," Byers has published his organisation's "year in review."

Throughout last year, after a critical report by the Royal Commission, APRA intensified its examination of the effect of remunerative practices on the promotion of effective risk management. It has proposed (but has not actually brought into force) a new prudential standard called CPS 511 Remuneration (CPS 511).

Acting tough

A turning point for APRA’s supervision of the superannuation industry in 2019 took place in April, with the passage of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No 1) Act 2019. This substantially increased APRA’s powers to regulate superannuation, granting it a wide and long-sought-after “directions power.” Byres describes this as a “game changer” because it enables him to intervene at an early stage before members suffer significant harm, rather than needing to wait until after a contravention of the law has taken place, or until he believes there to be an urgent, material threat to members’ interests.

The new law also allows APRA to take civil-penalty action against trustees and their directors for breaching their obligations to members, including the duty to act in the best interests of members. In addition, it enables APRA block a change in ownership or control of a firm that holds a Registrable Superannuation Entity licence; instruct someone to relinquish control of such a licensee; and to remove or suspend a licensee if it is subject to the control of its owner.

APRA, now very eager to 'act tough,' has made use of these powers. It issued directions to companies in the IOOF group to comply with new licence conditions that it had imposed in the previous year. In June, it used the "new directions" power for a second time by issuing directions to AMP Super in response to problems raised before the Royal Commission. Finally, last month, APRA used its new "change of control" powers to approve IOOF’s acquisition of a controlling stake in ANZ bank’s RSE licensee businesses, OnePath Custodians Pty Ltd and Oasis Fund Management Ltd.

APRA has also imposed new licence conditions on Avanteos in December over the charging of fees to dead people.

Two Royal Commission proposals fulfilled

In November, APRA canvassed opinion about its proposal to revise Prudential Standard SPS 250 Insurance in Superannuation (SPS 250), as the first step in making improvements recommended by the review. It wants to require trustees to make it easier for members to opt out of insurance cover and to meet their obligations to provide insurance cover of a level and type that does not inappropriately erode the retirement income of members. Furthermore, the changes address two Royal Commission recommendations, which require independent certification of related-party insurance arrangements and say that any status attributed to a member, such as 'smoker status' or 'employment-type status,' ought to be fair and reasonable.