On Oct. 24, 2024, AST APRA published Response paper - strengthening financial resilience in superannuation, which contains its response to the proposal above.
AST APRA published SPS 114 in clean, and marked-up version showing amendments.
It also issued SPG 114 in clean, that commences Jul. 1, 2025, same time as SPS 114.
On Feb. 19, AST APRA proposed strengthening financial resilience.
AST APRA issued letter to all registrable superannuation entity (RSE) licensees.
Proposed amendments to Prudential standard SPS 114 operational risk financial requirement (SPS 114) and its associated guidance; seeking feedback on materials.
AST APRA is proposing a simpler approach following wide range of feedback in relation to its Nov. 2022 proposal and the interaction between this policy area with the development of Prudential standard CPS 230 operational risk management (CPS 230).
The approach will be easier to implement than the model previously consulted on.
Will not progress proposal to introduce separate components to the operational risk financial requirement (ORFR); but focus on integration with CPS 230, use of ORFR.
AST APRA proposes to amend SPS 114 and SPG 114 to clarify the purpose of ORFR.
Introduce a clear and direct relationship with CPS 230; widen the range of uses for the ORFR; amend notification requirements in order to facilitate use of the ORFR.
Changes are expected better to position RSE licensees to use the ORFR actively for its intended purpose: manage the impact of disruption fairly across different beneficiaries.
In addition, AST APRA also explained that it will monitor industry practice in order to assess whether there is a need to further evolve the requirements and guidance.
Next Steps
Subject to consultation outcomes, it plans to finalize updates to SPS 114 in late 2024.
It said updated SPS 114 would commence in 2025, to align with (or follow) CPS 230.
Consultation End
The comment period for this consultation closes on May 13, 2024.
Oct. 2024 AST GVT Registered Instrument
On Oct. 17, 2024, AST GVT registered the Superannuation (prudential standard) determination no. 6 of 2024, which revokes SPS 114, and determines a new SPS 114.
It also issued explanatory statement re same; instrument commences on Jul. 1, 2025.
Respondents to consult above were generally supportive of proposed changes to draft amended SPS 114, SPG 114; submissions identified some areas for more consideration for AST APRA, other areas where greater clarity, additional guidance was requested.
Explanatory statement includes discussion of key matters raised in the submissions.
AST APRA said it has taken account of these areas of feedback; in particular, AST APRA has made appropriate adjustments in relation to the guidance for ORFR target amount.
Namely, so that the guidance outlines minimum target amount based on entity’s size
In doing so, promoting proportionality; as a result, AST APRA removed the guidance that referred to a need for regulatory engagement as well as an implication that data and analysis may be required in order to support an RSE licensee’s conclusions.
AST APRA said the final guidance outlines a clear and simple expectation that applies across the industry, based on entity size (based on funds under management).
In addition, AST APRA said it has responded to submissions that sought for SPS 114 requirements to be included in a holistic view of capital and reserving frameworks.
AST APRA said it will not presently consider SPS 114 requirements within this context, but remains open to considering these views in the future; the ORFR is the amount of financial resources maintained by RSE licensee to respond to certain operational risks.
Oct. 24, 2024 AST APRA Response
On Oct. 24, 2024, AST APRA published Response paper - strengthening financial resilience in superannuation, which contains its response to the proposal above.
AST APRA published SPS 114 in clean, and marked-up version showing amendments.
It also issued SPG 114 in clean, that commences Jul. 1, 2025, same time as SPS 114.
