Using the Member Outcomes Assessment to inform your business plan

Recap on member outcomes obligations

As covered in our previous blog on Superannuation Member Outcomes, APRA’s SPS 515 Strategic Planning and Member Outcomes requires RSELs to develop robust member outcomes assessments and embed these into their strategic planning processes.

APRA provides supporting guidance in SPG 515 Strategic and Business Planning and SPG 516 Business Performance Review.

The prudential standard requires RSELs to:

Set specific outcomes sought for beneficiaries and establish strategic objectives within the business plan to achieve them – to ensure strategic objectives are in the best financial interests of members.
Establish processes for decision making and monitoring of fund expenditure, particularly significant fund expenditure – RSELs are to show that all expenditure is in the best interests of members and the sound management of the business.
Conduct an annual outcomes assessment and factor results and learnings from this into future strategic plans – to identify how member benefits can improve and the mechanisms for implementing such improvements.

SPS 515 commenced on 1 January 2020. The first outcomes assessments were due for completion in early 2021 to be published by 31 March 2021.

Factoring the results and learnings from the Member Outcomes Assessment into future strategic plans

SPS 515 makes clear that there must be a strong link between the outcomes the RSE licensee seeks to provide to members and the strategic objectives set by the Board. It is therefore a requirement under SPS 515 that the outcomes that are sought for members and the most recent business performance review are considered by the Board when it sets or reviews its objectives and develops or revises its business plan.[1]

So, now that you’ve undertaken the outcomes assessment and made determinations in respect of whether the financial interests of beneficiaries of the RSE are being promoted, the results need to be factored into future strategic plans along with insights gained from the Business Performance Review (BPR).

By now, you should have completed the initial BPR in December 2020, and the FY20 Member Outcome Assessment (MOA) with published determinations by end of March 2021.

The outcomes should have been articulated across various performance elements, including, but not limited to:

a) risk-adjusted investment returns net of investment fees;

b) administration and other fees;

c) insurance product design, premiums, claims management, and terms and conditions;

d) retirement products; and

e) member services, engagement, and education.

The resulting determination should have identified areas where your products are meeting objectives and member financial outcomes for certain cohorts, and areas where they can / need to be improved. APRA will now expect to see a link between these findings and the initiatives in your business plan.

Utilise the analysis and corresponding determination to consider:

Where is your product and/or beneficiary cohorts an outlier when compared to the industry or comparison funds? Does it merit urgent review?
In what areas did your product and/or beneficiary cohorts perform differently to expectation?
What actions must be taken to improve performance in both the short and medium-term? How can these be incorporated into the business plan?
Do your findings align with your strategic objectives and business planning initiatives, or do they need to be updated/calibrated?
Are appropriate KPI’s in place and aligned to strategic objectives? Do they require more thorough monitoring and review?

Of course, this is also a good time to determine if your business planning process also meets the SPS515 expectations with regards to significant fund expenditure and how those decisions are being monitored.

Planning for future assessments

With all funds now completing the MOA process at least once (some did an additional assessment either proactively or upon regulator request), our network all concur that this was a complex and time-intensive task. Noting that is now an annual process, we recommend undertaking a post-implementation review as per standard project management methodology, to identify what can be improved for the next cycle.

We suggest this post-implementation covers the following themes and questions:

How difficult was it to obtain the required data to complete the Member Outcomes analysis? We recommend considering how data collection can be improved ahead of the next assessment, and if strategic planning is required to achieve the desired state.
As the MOA exercise requires many different stakeholders to provide data and/or insights is the overall ownership clear? Do the roles and responsibilities of the overarching BPR/MOA tasks need to be reviewed?
Is the MOA process best run as an annual project by the project management office (PMO) if available, or should it transition into a BAU activity? Is there adequate capacity to undertake this as a BAU activity, and if not, what are your options?
Does the Strategic Planning and Member Outcomes Framework require a refresh now that the full processes cycle has taken place? This may include reviewing the desired outcomes or enhancing the documented operational processes for practical application.
Can you maximise efficiencies across other regulatory changes to inform the BPR or MOA? For example, we’ve previously written about the interactions of the Member Outcomes and Design and Distribution Obligations (read it here).

How we can help

If you need external support to meet the strategic planning and member outcomes obligations, we’re here to help. Our services in relation to this regime include:

Independent review of outcomes assessment frameworks and processes.
Drafting of business performance review reports and member outcomes assessments.
Independent review of strategic planning processes and the ongoing monitoring/reporting against KPIs.

To capture the potential benefits from the interaction of the member outcome obligations. and the design and distribution obligations, we can also review ongoing business processes under the two regimes to identify opportunities for added efficiency.

Contact us for a confidential, no-obligation consultation to discuss how we can support you through these regulatory changes.