Super funds critical on alt investment regulation

Date: Thursday, April 3, 2008
Author: Michael Hobbs, Financial Standard

 Almost one third of super funds that invest in alternatives are unhappy with the level of regulatory scrutiny in the sector, according to a Deloitte survey.

Deloitte conducted the two month survey ending in December last year in conjunction with interviews with representatives from 22 super funds including AMP Super, ING Australia, Suncorp and CBUS.

The survey found the super fund alternative investments such as hedge funds, private equity and infrastructure was had not been met with more regulation.

“The areas of concern included infrequent valuations the quality of the investment reporting and in cases a lack of understanding around the risks associated with the investment,” said Richard Rassi, Deloitte Superannuation partner.

Subsequently, the report recommended the Australian Prudential Regulator Authority (APRA) provide guidance on alternative investments.

However, the report found 66 per cent of respondents said risk management practices had “changed significantly” since the Registrable Superannuation Entity (RSE) licensing system was implemented in 2004.

“This is a positive outcome from the RSE licensing regime, but there is still scope for improvement,” he said.

The survey recommends super funds seek an independent annual assessment of the board’s performance, consistent reviews of director’s remuneration levels and encouraged funds to outsource to service providers to improve performance.

In addition, the Deloitte survey suggests the implementation of a single super fund regulator.

 
Michael Hobbs