Diversified wealth manager IOOF (ASX: IFL) has received a MySuper license from the Australian Prudential Regulation Authority (APRA) for its IOOF Balanced Investor Trust product, according to a report published on the Financial Standard website. The approved MySuper product will become the default option, replacing IOOF's previous default option, in January 2014.
The granting of approval to IOOF by APRA comes just days after the ANZ Bank (ASX: ANZ), as reported here, announced that its ANZ Smart Choice Super product had been approved as MySuper compliant. With all employers forced from 1 January 2014 to pay default superannuation contributions into an authorised MySuper product, the clock is ticking for super funds to meet the deadline. With around 75 super funds now authorised with MySuper it appears there is still a number of superannuation providers yet to receive approval.
In other financial service industry news, AMP's (ASX: AMP) funds management arm AMP Capital has emerged with an 8.4% stake in New Zealand-based insurer Tower (ASX: TWR) following the sell down by Guinness Peat Group (ASX: GPG). Guiness Peat Group has been a long-term cornerstone shareholder in the NZ-based insurer however following its decision to sell investments and return funds to shareholders, so it was a matter of when, not if, the stake in Tower would be divested.
Foolish takeaway
The superannuation industry and particularly the self-managed superannuation fund space are facing a number of regulatory hurdles at present. In particular, SMSFs are coming under scrutiny for their investment in property assets that some argue is unduly driving up property prices. Other critics are arguing SMSF property investments are often simply a means of tax avoidance.
Given its size and importance, the superannuation industry is only going to face more scrutiny in the future. Large financial service providers that have the scope to deal with the regulatory environment and the means to leverage the costs across a wide base are best placed to handle the regulatory environment and best placed to enjoy the tailwind from the future increase in contribution levels.
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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
