The Australian Prudential Regulation Authority (APRA) and ASIC have released an updated Unit pricing – guide to good practice for the life insurance, superannuation and funds management industries in response to continued unit pricing errors.

The joint APRA/ASIC guide has been amended so that scheme operators can elect not to make payments to exited members for unit pricing errors where the compensation due is less than $20.

The amendment does not affect the legal rights of members – this remains a matter for scheme operators to assess. However, the regulators will be satisfied if scheme operators adopt this amendment when determining compensation to individual members.

The $20 minimum would only apply to payments made to exited members; those members still in the fund should expect to be compensated regardless of the amount involved. The aim of the rectification process is to restore all parties to the position they would have been in had the unit pricing error not occurred. At the end of that process, any net cost is to be met by the scheme operator. However, if there is a net benefit from amounts not paid to exited members, that benefit is to remain in the fund – the scheme operator must not benefit from the process. The scheme operator also remains responsible for all administrative rectification costs.