APRA deputy chair Helen Rowell has urged trustees to take their business planning and stress testing obligations seriously to deal with sudden or unexpected changes in the economic or regulatory environment.
“Undertaking robust business planning and stress testing designed to ensure you are prepared for significant changes and shocks – including those that might be considered unlikely or even ‘unimaginable’ – is one way to be on a stronger footing to protect members’ best interests no matter what you may encounter,” Rowell said.
With the COVID-19 pandemic impacting the industry, Rowell said the effective implementation of SPS 515 has now become crucial.
SPS 515, which is part of the regulator’s goal to improve outcomes for superannuation members, expects trustees to “manage their operations like the significant financial services businesses they are.”
“The financial and operational challenges created by the pandemic pose additional questions that trustees need to reflect on in fulfilling their SPS 515 requirements and their legal duty to protect members’ interests,” Rowell said.
“As much as we want trustees to ensure their stress test scenarios are realistic, a prudent trustee should also consider its capacity to respond to major regulatory or other developments, including those that might be considered highly unlikely or not aligned with their view of the world.”
