APRA Review Highlights Deficiencies in Superannuation Trustees

(Reuters) – Australia's prudential regulator announced on Tuesday that its review identified deficiencies in valuation governance and liquidity risk management among superannuation trustees, urging immediate action to comply with Prudential Standard SPS 530 Investment Governance (SPS 530).

The Australian Prudential Regulation Authority (APRA) noted that while the capability and approach of trustees have generally improved since the last unlisted asset review in 2021, some trustees still exhibit significant gaps in essential areas.

Key Findings

APRA's review highlighted key weaknesses in unlisted asset valuation governance, including:
– Board Oversight
– Conflict of Interest Management
– Revaluation Triggers
– Valuation Controls
– Fair Value Reporting

Deputy Chair Margaret Cole emphasized that APRA will not hesitate to take further action as necessary to enforce SPS 530 provisions and related regulations, including responsibilities of accountable individuals under the upcoming Financial Accountability Regime.

Requirements of SPS 530

The SPS 530 standard mandates that licensees:
1. Establish measurable investment objectives.
2. Conduct thorough due diligence.
3. Regularly assess investment performance.
4. Implement annual stress testing.