The Australian Prudential Regulation Authority (APRA) has imposed additional licence conditions on the trustee of a prominent Super Trust and Superannuation Plan provider, which has around 850K members and $70 billion in funds under management.
The independent watchdog for banking, insurance, and superannuation industries is tightening conditions on the trustee, aiming to further protect customers due to concerns about its failures to manage risk and compliance obligations.
APRA has ordered the trustee to engage an independent expert to address and fix deficiencies under the terms of its new licence conditions. It must also engage a third party to review the effectiveness of its risk and compliance management and set out a plan to address any further shortfalls.
APRA deputy chair Margaret Cole explains, “We have applied these conditions to drive substantial governance and risk management improvements… and protect the interests of its members.”
The trustee experienced rapid growth following two late-2022 and mid-2023 acquisitions.
Cole adds, “It is important that, when preparing to scale up operations, the trustee has the appropriate level of controls in place to ensure frameworks and systems continue to serve the needs of current and future fund members.”
The trustee subsequently acknowledged the lack of due diligence in continuously managing outsourced providers and risk management responsibilities, which APRA found constituted significant breaches of prudential standards SPS 220 Risk Management (SPS 220), SPS 231 Outsourcing (SPS 231) and SPS 232 Business Continuity Management (SPS 232).
APRA identified the breaches as part of a regular prudential review of the trustee in October 2023.
Cole notes, “APRA is prepared to take strong steps, including taking enforcement action, where a trustee’s operational resilience management is substandard.”
The actions imposed in this case are a reminder to superannuation funds and other financial firms in Australia that the regulator is sharply focused on ensuring prudential standards are met and enhancing the protection of customer interests.
Read more about the case in the APRA media release.
This year, APRA is conducting a broad review of governance requirements, including those set out in Prudential Standard CPS 510 Governance, Prudential Standard CPS 520 Fit and Proper and other relevant standards.
Additionally, the Financial Accountability Regime (FAR) has already come into effect for banks from March 2024 and for the insurance and superannuation industries from March 2025. The Bill aims to strengthen accountability in all regulated entities.
APRA and ASIC have released a cross-industry information package on the FAR and says it will host a series of webinars to support insurance and superannuation entities in preparation for the FAR commencement.
MyComplianceOffice(MCO) and GRC Solutions recently ran a live webinar detailing the regulatory obligations Australian firms need to know about.
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