In a letter sent to registerable superannuation entity (RSE) licensees on 10 April 2019, APRA and ASIC reinforced the importance of oversight to ensure fees charged to members are correct and in their best interest. This included a range of issues and ‘approaches for actions’ to address the oversight.  

The regulators expect all superannuation trustees to review the robustness of their governance for fees charged to members and address areas for improvement substantially by 30 June 2019.

APRA and ASIC suggest three main approaches for actions to take place with: 

1. Preventative measures to ensure appropriate authorisation and understanding takes place; 

2. Interrogative processes to regularly check the services taking place and; 

3. Remedial actions to ensure the appropriate compensation of members where inappropriate chargers occur. 

These approaches involve long-term actions that will take time but also actions which can be taken immediately. 

An interrogative approach will require a robust data quality platform like QMV’s own Investigate.  

Investigate can meet this need and meet it quickly. Regular data checks across any number of data platforms can not only pinpoint where member fees may require attention but can also identify discrepancies leading to remedial actions to ensure compensation takes place where appropriate. 

Regular member fee checks can be performed with Investigate in several ways: 

• Indicative checks  

  Will ensure that fees seem reasonable and meet basic logic checks. Here, Investigate looks at the timeliness of fees with respect to what they represent. For instance, a change in insurance premiums should correspond to a change in cover. Upper and lower threshold checks also offer valuable insights because members are unlikely to be charged large amounts for administrative fees that are only several dollars. These types of checks help identify members that are potentially being charged incorrect fees. 
   

• Comprehensive checks 

  Will ensure that fee amounts have been calculated and deducted correctly. Here, Investigate can implement the most detailed and accurate checks, however we caution this because often the complexities involved for fees providing certain entitlements and allowances (e.g. backdated changes to member details or insurance cover) may outweigh the value in delivering such a check. 
   

• Eligibility checks 

  Will ensure fees charged are consistent with authorisation and member’s best interest. These types of checks range from simple comparisons, for instance member status is inactive or even deceased,  to complex eligibility criteria that includes employment and fund commencement time frames. 

Checks such as these are implemented by Investigate in the form of rules, which are defined and traced back to policies, trust deeds and governing sources of truth. The flexibility of defining and implementing rules means that often most checks can be up and running within a day or a matter of hours. This might sound like an exaggerated claim, but in our experience, we find the delivery to be the fastest step in the process. 

Checks are only as valuable as their effectiveness and timeliness. The more regularly run, the faster potential problems are identified and subsequently the remediation effort is reduced. Using Investigate’s schedules, the rules can be run as often as needed automatically taking the coordination and worry of this task away.  

For any remediation effort to succeed the exceptions identified by the checks need to be tracked and workloads managed. We can achieve this in Investigate using functionality to assign cases out to staff to work on while also monitoring the resolution of these. This provides the basis for insights where remediation efforts haven’t been as effective, resulting in exceptions of the same type recurring, even down to a member that may experience the same problem multiple times. 

Although many challenges lie in the road ahead to not only better meet the oversight of fees but also data quality for members in general, an interrogative approach can yield benefits today while also investing in the future. Investigate can provide solutions quickly and play a part in a larger ongoing risk management framework. We encourage all RSE licensees to reach out to QMV and explore ways in which we can assist you to deliver rigour and effective oversight around the correctness of member fees. 

The letter sent from APRA and ASIC on 10 April 2019 can be found at this link.

Regards 

Tom Seel – Product Lead, Technology 

If your organisation needs assistance with implementing robust controls around member fees, QMV has extensive experience in this area. Please feel welcome to contact our head office p +61 3 9620 0707 or submit an online form. 

QMV provides independent advisory, consulting and technology to superannuation, wealth management, banking and insurance organisations.

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