APRA to strengthen superannuation investment governance

APRA has announced plans to strengthen investment governance requirements for superannuation trustees, alongside a Government proposal for a compensation scheme giving superannuation members a clearer path to compensation where significant losses arise from a trustee failing to meet its obligations. Under the Government's proposal, APRA would set capital requirements for trustees offering higher risk investment options, intended to ensure trustees have the financial capacity to meet obligations under any compensation scheme once legislated.

APRA has said it will consult on a package of reforms addressing eight areas across the investment management lifecycle, including ensuring a trustee's investment management capability is proportionate to the complexity of its investment menu, addressing weaknesses in the onboarding, monitoring and offboarding of investment options, managing material conflicts of interest, improving member level diversification and strengthening trustee oversight and accountability. The proposals follow APRA's 2025 review of industry practices, which covered around 95 per cent of platform assets under management and identified a number of shortcomings the new proposals are intended to address.

APRA has said the investment governance reforms would apply to all superannuation trustees, but the impact is expected to be greatest for platform trustees, whose investment menus are typically broader and more complex and where financial advisers play a larger role in selecting investment options for members. APRA intends to consult on the detailed design of the capital framework once the Government finalises the related legislation, and at the time of the announcement had not yet released the consultation package itself.