The Australian Prudential Regulation Authority (APRA) has imposed a new registrable superannuation entity (RSE) licence condition on Commonwealth Bank subsidiary Colonial First State Investments (CFS) and Suncorp Portfolio Services (SPS), a division of Suncorp Group.
The new licensing conditions, which are effective immediately, are designed “to ensure members’ best interests are prioritised in its decision making”.
This follows an investigation into matters referred to it by commissioner Kenneth Hayne in the final report of the banking royal commission.
The commission found that both CFS and SPS delayed in transferring members into lower-fee MySuper products until just before the legal deadline.
APRA noted that it has not concluded that CFS or SPS have breached the Superannuation Industry (Supervision) Act 1993, but state that its investigation “raised concerns” about the adequacy of CFS and SPS’ processes for “demonstrating how members’ best interests were considered and prioritised”.
As a result, the new licensing conditions will require both entities to record considerations of their members’ best interests and priority covenants when making decisions that “materially affect their interests”.
APRA has also issued separate directions to SPS, requiring it to:
- obtain independent expert verification of the analysis and methodology that will be used to determine the remediation of members affected by the delay in transferring to MySuper products;
- notify affected members of the remediation plan; and
- make a public statement in respect of the plan.
SPS’s payment of tax surpluses to Suncorp Life has also been deferred by the royal commission to APRA for investigation, which will be considered by the regulator as part of a “broader thematic review into trustee reserving practices in the superannuation industry”, before considering further action.