28 | October | 2020
The prudential regulator will crack down on spending by superannuation funds on advertising and marketing, saying the $2.9 trillion sector will be subject to “heightened obligations” to justify expenditure and ensure it serves the best interests of members.
Australian Prudential Regulation Authority deputy chairwoman Helen Rowell told Senate estimates prudential standards implemented earlier this year were “very much focused on outcomes for members, and we will be expecting much more documentation and analysis (by funds) to support expenditure decisions”.
During the hearing, Liberal senator Andrew Bragg led the line of inquiry into what he described as APRA’s “reluctance” to tackle wasteful and politically motivated spending on marketing by Industry Super Australia (ISA), the umbrella organisation for industry super funds, including giants such as AustralianSuper and HostPLUS.
Senator Bragg told The Australian he was encouraged by the regulator’s commitment to further scrutinise how funds spent members’ money.
“APRA has made an important step in restoring my confidence in the prudential regulator,” he said. “Now APRA needs to follow through by stamping out these propaganda campaigns financed by workers’ superannuation.”
Of particular concern to Senator Bragg was the “wall to wall” advertising, particularly over the football finals weekend, of ISA’s “Our Biggest Project“ campaign, led by former Labor minister Greg Combet.
“I don’t have a problem with private sector firms advertising products, but this is a political ad — you just need to look at who’s fronting the ads,” he said.
But ISA chief executive Bernie Dean said he “welcome enhanced scrutiny from regulators”, as “everything we do is in the best interests of members”.
“Advertising is a cost-effective way for funds to attract and retain members, with the benefits of scale passed on through lower fees, better investment returns and enhanced community trust,” Mr Dean said.
Senator Bragg quoted Neilson data suggesting ISA spent $40m on the “Our Biggest Project” campaign. ISA has disputed the figure, saying the umbrella’s group’s annual budget was $23m, and indicated it would send a letter to Senator Bragg requesting he correct the record.
ISA did not provide a cost to the campaign.
Senator Bragg said “either way they should not be wasting super money on political campaigns”.