Australia’s regulator is exploring changes to a cornerstone of the country’s superannuation system in response to concerns that fraudsters are targeting the A$3.3tn (US$2.2tn) sector.
Funds in the system, which has grown to be one of the world’s largest because of compulsory pension-saving requirements, have to complete a member’s transfer request within three business days. The rule was put in place a decade ago to enable the smooth transfer of members’ cash.
However, funds managing tens of billions of retirement cash have appealed to the Australian Prudential Regulation Authority to lift the three-day rule, arguing that it does not give them enough time to complete fraud and identity checks.
Cyber security concerns have escalated after a series of high-profile corporate data breaches, including at Optus, the Singapore-owned telecoms company, which last year said millions of its customers in Australia had personal data stolen in what it called a cyber attack.
Apra, which supervises financial institutions holding A$7.9tn in assets, said it was examining the funds’ concerns.
“We are treating the request from industry very seriously and giving careful consideration to the options available to us,” Margaret Cole, deputy chair of Apra, said in an interview.
“We are balancing the need to enable efficient straight-through processing and fraud risk. Technically we aren’t sure that we can provide a blanket class order, but we are exploring what we can do to assist.”
Options put to the authority by super funds include extending the three-day rule or permitting more flexibility when it takes longer to verify a member’s identity. Under current rules, funds are required to report breaches of the three-day rule.
UniSuper, one of Australia’s largest super funds with 620,000 members and A$115bn under management, is among the funds appealing to the regulator to modify the three-day rule.
“There’s a lot of fraudulent players out there pretending to be members,” said chief executive Peter Chun. “We have a duty to ensure we’re protecting members’ savings.”
The Association of Superannuation Funds of Australia, the industry body, said it was crucial to have sufficient time to authenticate transaction requests.
The superannuation sector is at the centre of Australian political debate after the Labor government announced plans aimed at harnessing the country’s retirement system to fund “nation-building” investments in clean energy, while reforming parts of the system it deems inequitable.
The proposed reforms include a cap on tax breaks for superannuation accounts with a balance of more than A$3mn from 2025.
The move, which would affect 80,000 account holders, is intended to help the country’s budget but has been politically divisive, with the opposition Liberal party vowing to repeal the plan if it is elected.
Additional reporting by Nic Fildes in Sydney