APRA raises the bar for buyers of superannuation fund

The regulator has been given the power to stop people taking over super funds if they fail a fit and proper test.

The new law on takeover of super funds requires additional disclosure from potential buyers and comes into force on July 5.

People and companies who buy a superannuation fund will have to tell the prudential regulator about any crimes they have committed and give details of investigations into them under new rules that come into force in a fortnight.

Under new laws passed in April, the Australian Prudential Regulation Authority has been given the power to stop people taking over super funds if they fail a fit and proper person test.

The law, which comes into force on July 5, is designed to close a loophole allowing people to take over existing funds and avoid the extensive scrutiny APRA applies to those trying to set up a fresh fund.

It forms part of a crackdown on super regulation following last year’s Hayne royal commission and comes a decade after APRA and it sister agency, the Australian Securities & Investments Commission, were blindsided by the nation’s biggest ever super fraud, the $176 million collapse of Trio Capital.

The new disclosure requirements still fall short of the inquiries made of those setting up a fund from scratch, but APRA deputy chairman Helen Rowell said the new rules “will ensure anyone seeking to acquire a substantial stake in an APRA-regulated superannuation licensee is subject to rigorous regulatory scrutiny”.

“APRA has held longstanding concerns about the ability of parties to gain control of a superannuation licensee through the ‘back door’, without meeting the requirements of a stringent approval process,” she said. “These concerns were heightened after this loophole contributed to the fraud that precipitated the collapse of Trio Capital in 2009.”

Industry has been given just a fortnight to comment on the proposal, making it unlikely APRA will substantially change the disclosure requirements before the law goes into force.

Under the new rules, potential buyers of a super fund — a registrable superannuation entity, in the legal jargon — will be required to give APRA “details of any civil or criminal proceedings or enforcement action (in Australia and/or overseas)” that was “determined adversely” against those who are to be responsible for the fund.

“This would also include any investigations by regulatory agencies, or where consent by the proposed responsible person to an order or direction or provision of an undertaking not to engage in certain conduct was given, and any other matters which reflect adversely on the person’s competence, diligence, judgment, honesty or integrity.”