Super spending calls BFID compliance into question

There is still much room for improvement when it comes to super funds' expenditure management practices, with APRA finding some RSEs caring more about competing with peers than members' best financial interests, others not having revisited historic arrangements since the BFID was legislated, and a host of other shortcomings.

- Jamie Williamson

The review of 14 RSE licensees' expenditure practices and decisions comprised thousands of documents covering discretionary spending, marketing and connected entity expenses. The regulator also looked at the contributing factors to funds' expenditure decisions, including potential conflicts of interest, guidance related to spending, and monitoring and reporting.

When it comes to decision-making, APRA said it found instances of RSEs placing more emphasis on the positioning or activities of competitor funds than on members' best financial interests. It also found cases in which decisions to continue with contracted expenditure did not demonstrate a clear rationale or member benefit, insufficient levels of due diligence being conducted, and some RSEs lacking standardised processes for entering into agreements.

However, it did note that some RSEs demonstrated better practices, including decision-making supported by data, clear links between objectives and expected outcomes for members, use of a committee for additional oversight, and standardised processes.