Trustees blamed for APRA test failures

The Australian Prudential Regulation Authority (APRA) has released the results of its annual performance test, which assessed 547 superannuation products representing 61 per cent of member benefits across the sector. Eleven trustee-directed products (TDPs) from platforms were among the failures, with six of these being first-time failures and five having failed for at least two consecutive years.

APRA’s assessment found that poorer investment performance, rather than higher administration fees and costs, was largely responsible for the failures. The failed products included those with exposure to MLC MultiActive High Growth and MLC MultiActive Geared investment options across several platforms.

Six trustees were responsible for the underperforming products, with Insignia Financial-related platforms being among those affected. Insignia confirmed that MLC MultiActive High Growth and MLC MultiActive Geared had failed the test across three super funds within its Wrap platform business.

Despite failing the test, MLC MultiActive High Growth delivered a net return of 8.84 per cent over one year and 9.68 per cent per annum over 10 years to 30 June 2026.

APRA said that RSE licensees are expected to identify the causes of underperformance and develop and implement a plan to rectify this underperformance. If it is in the best interests of members, they should develop a plan to transfer members to another option, product or fund and/or exit the industry.

For products that have failed for at least two consecutive years, the RSE licensee is required to close the product to new members on the day following the APRA notification. In terms of member accounts, 2.7k were a first-time failure and 2.1k were a repeat fail, although APRA acknowledged that members may hold more than one account.

Other first-time platform failures were associated with Oasis Fund Management Limited and OnePath Custodians Pty Limited, including products with exposure to MLC MultiActive Geared Trust and MLC MultiActive High Growth Trust. Meanwhile, five consecutive failures concentrated among two trustees: Bendigo Superannuation Pty Ltd and N. M. Superannuation Proprietary Limited.

Products offered by N. M. Superannuation Proprietary Limited were among the consecutive failures, including products linked to the North Guardian Balanced Fund, North Guardian Growth Fund and North Guardian Moderately Defensive Fund. Bendigo SmartStart Super products linked to the Bendigo Balanced Wholesale Fund and Bendigo High Growth Index Fund were also among the repeat failures.

The APRA performance test is designed to help Australians compare superannuation products, but the results demonstrate the need for a more detailed approach when evaluating specialised investment options on wrap platforms. As the superannuation sector continues to evolve, further discussions around the effectiveness of the performance test in capturing the complexities of different investment products will likely occur.

In terms of future steps, APRA’s expectations for RSE licensees to rectify underperformance and develop plans to transfer members to other options will be closely watched. The regulator’s emphasis on identifying the causes of underperformance and taking corrective action will be essential in ensuring that members’ best financial interests are protected.

APRA’s actions will help protect members’ interests.