Colonial First State Investments and Suncorp Portfolio Services have had new licence conditions imposed by APRA, in both cases following the licensees' delays in transferring members into lower fee MySuper product (with a deadline of mid 2017).
Sixteen months after being tasked to do so, APRA has disposed of three of the 12 cases that Kenneth Hayne referred to the regulator for further investigation in the banking royal commission’s final report last year.
In the case of Colonial First State, APRA explained the royal commission formed the view that CFSIL’s decisions not to bring forward the migration of select cohorts of its FirstChoice members into MySuper products from just prior to the legal deadline, and to grandfather certain fee arrangements, “may not have been in its members’ best interests”.
APRA said it "has not concluded that CFSIL breached the Superannuation Industry (Supervision) Act 1993, [but] its investigation raised concerns about the adequacy of CFSIL’s internal processes for demonstrating how members’ best interests were considered and prioritised."
As a result, APRA imposed a licence condition requiring CFSIL to record how it considers members’ best interests and members’ priority covenants when making decisions that materially affect their interests.
Colonial First State "did not oppose the application of the new condition", APRA said, which comes into effect immediately.
In the case of Suncorp, APRA once again said its "investigation did not conclude that SPSL breached the Act", and repeated the language that "the investigation raised concerns about the adequacy of SPSL’s internal processes”.??APRA said it imposed a new licence condition requiring SPSL to document how it considers and prioritises members’ interests when it makes decisions that materially affect their interests.
APRA said it also issued directions to SPSL requiring it to obtain 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 and “make a public statement in respect of the plan”.
APRA said it was "still considering" Hayne's related reference on SPSL’s payment of tax surpluses to Suncorp Life.
To simplify a dense topic, and quoting from Hayne's final paragraph in this section: "Suncorp did not use the tax surplus to reduce its disclosed fees. Suncorp simply kept it.”
Haye went on to chastise Suncorp for making it "effectively impossible" for clients to understand its fees on superannuation.