AIST appreciates the opportunity to comment on draft Prudential Standards SPS 510, SPS 512 and their corresponding Prudential Practice Guides SPG 510 and SPG 512.

At the time of writing, the Superannuation Legislation Amendment (Trustee Governance) Bill 2015 to which the draft standards and practice guides relate has not yet passed through the parliament. We note that the draft regulatory package proposed by APRA is subject to the Bill passing in its current form, and that further consultations may be required if amendments are made.

On 31 August 2015, APRA released the discussion paper ‘Governance Arrangements for RSE licensees’ inviting comments on the draft prudential standards and practice guides released with the discussion paper. AIST has also had the opportunity to consider the Frequently Asked Questions released on APRA’s website on 15 October 2015.

While AIST supports high standards of governance in the superannuation industry, we do not support the Government’s reform package. AIST does not believe that the changes are warranted and is unconvinced about any resulting benefit to members.

AIST also believes that the draft prudential regulation package released by APRA should be less prescriptive and more principles-focused in its approach. The focus on independence in both draft SPS510 and SPG510 overstates the weight of independence as defined in the Bill. This may impede the efficient operation of superannuation funds, and increase, rather than reduce, risk.

AIST recommends that APRA ensures that its prudential governance framework features the right balance of the range of factors that help to ensure good governance and highly effective board decision-making.

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