For example, funds should think more about cashflow given the demographic shift to more super fund members entering pension mode. "I don't doubt that most of the people out there in the super industry on boards and running funds believe genuinely they have the best interests of members at heart and they're doing what they can to meet those," Ms Rowell said. "The question is, how are they making that judgment? Are they doing enough to really understand what members want? Do they have the right benchmarks and assessment mechanisms in place to assess the quality of what they're offering? That's where we see the gap. We need to shift from 'of course we act in best interest of members' ... to seeing the concrete evidence of how trustees are turning their minds to that." Ms Rowell told a recent Senate Estimates hearing that APRA had identified 20-25 MySuper products – the default products for employees who fail to select a investment option – that could be forced out of the market because of poor performance against a number of criteria, including net returns, fees, insurance costs, member numbers and fund flows. While APRA did not publicly reveal the names of the under-performing funds, it reportedly plans to meet with the boards and could force them to transfer members to a more suitable product or lose their licence.

Also on Monday financial services minister Kelly O'Dwyer announced expanded powers for APRA to regulate super funds as part of a suite of proposed reforms. She said the point of the insight article was to let the super industry know how the regulator is thinking about these issues, but she would rather the industry put its own objective assessments in place and form conclusions from that, rather than waiting to react to regulation. The metrics outlined in the insight article replace the old scale test, under which APRA could consider whether a super fund, or a particular MySuper product, had enough members and assets to operate efficiently. Danielle Press, the chief executive of the Myer Family Company and former chief executive of industry fund Equipsuper, said the new approach had drawbacks. "In defence of the industry, one of the things that is quite difficult in that environment is that we're looking for an objective test in something that's actually very subjective," Ms Press said. "It's not a criticism of APRA, it's more about how you get your head around that ... it's tough."

Ms Press said it was not as simple as asking members what they want or need, because the membership is not engaged. When she led Equipsuper, only 4.3 per cent of members voted in the director elections. "There's an issue with engagement with membership because they're not engaging back; those that are, are the ones that are noisy and cranky," Ms Press said. "Sad cases make bad law and you've got to find a balance." Mercer Australia chief executive Ben Walsh said he was generally supportive of the new test, but there would be challenges. The proposal to force super funds to have annual member meetings - which many large funds, especially industry funds, already do - was fine in theory but in practice merely holding a meeting did not make members interested. Ms Press said the small funds might need several mergers to get to scale and mergers and takeovers were hard to execute. The new test was better than the scale test for new entrants. There are several new super products using technology to improve the customer experience and try to increase engagement with younger members, among them GROW Super, Zuper and Spaceship.

"If you look at some of the disrupters, there's been commentary that they're not great products, they're not well priced, they don't yet have a track record," Mr Walsh said. "The concern is that the marketing has done a tremendous job and the customer experience of 'I'm in my pyjamas with my iPad and I can engage with my super' is terrific but I think the early disrupters will have an early blush but the price and the investment performance will need to come in at some point." However, Mr Walsh said funds could partner with disrupters to marry the best of customer experience with the scale of a big fund. Ms Rowell said the regulator had always been on record saying that the quality of offering mattered, not just scale. She would be happy to see new entrants offering "good disruption" if they provided good value to members, even though they would be initially small, "but it's critically important that there's alignment between what they say they offer and what they do offer." The legislation announced by Ms O'Dwyer gives APRA more power to take preventive and corrective action if it has prudential concerns about a fund or a fund is not acting in the best interests of members, as well as to refuse or cancel MySuper authorisation.

Directors of superannuation funds who breach their duties would now be subject to the same civil and criminal penalties as directors of ordinary managed investment schemes. Ms O'Dwyer also tasked APRA with making it easier for consumers to opt-out of automatic life and disability insurance policies provided through superannuation. Caitlin Fitzsimmons is editor of Money.