APRA targets super funds

Following the recent amendment to rules governing the insurance industry, the Australian Prudential Regulation Authority says it will now focus on superannuation fund managers.

APRA believes that the risk of a major collapse is increasing and the industry requires more surveillance. But Charles Littrell, the authority's head of policy and research, was quick to reassure investors that “99 per cent” of the nation's super funds are safe.

Only five superannuation groups have failed, Mr Littrell said, but unfortunately because these were relatively small the perception is that only small funds are risky. APRA has dealt with, and discovered, many problems involving large funds.

APRA needs to be more active and the authority is looking for greater supervision of funds' investment strategies and risk management procedures, Mr Littrell said. It will also examine the question of prohibiting “unfit and improper people” from managing funds, and look more closely at outsourcing practices.