The Australian Prudential Regulation Authority (APRA) has said it would like to extend its powers over the superannuation industry to emulate its powers over banks and other financial institutions.

APRA’s desire for more powers came at the same time as it revealed that three or four superannuation fund trustees were the subject of oversight by the regulator for “material shortcomings,” Super Review has reported.

It said those shortcomings related to governance and conflict management and weaknesses in risk management standards and controls.

APRA’s desire for the directions power was revealed to Senate Estimates, with APRA deputy chair, Helen Rowell confirming under questioning that the regulator believed a strengthening of its powers in key areas would be useful.

She said that, in particular, the introduction of a broader directions power such as it had over other industries would help, alongside powers to approve changes of ownership.

Directions powers

APRA direction powers can be used in several ways, including enforcing prudential requirements, as an early intervention tool to enable APRA to manage problems affecting regulated bodies before they cause failure or systemic problems, and as a means of limiting further deterioration in a period of emerging stress.

Direction powers are also a key element in the resolution process for a distressed regulated entity; directions can be used to implement a range of resolution options, including facilitating recapitalisation.

In this latter context, directions are an enabling mechanism assisting directors and senior management in taking the steps required to implement by giving them a clear and certain legal basis for taking action.