Australia’s prudential regulator is investigating one of the largest funds in Australia’s A$4.1 trillion superannuation industry for possible breaches of the law related to its spending.
The Australian Prudential Regulation Authority (APRA) said it had taken further action to address “material prudential concerns” about United Super Pty Ltd, the trustee for the Construction and Building Unions Superannuation Fund (Cbus).
APRA said it had taken steps to ensure its concerns were addressed through Cbus’ acceptance of a court enforceable undertaking (CEU) and the publication of a rectification plan.
Cbus has agreed to undertake a holistic risk transformation program to address concerns about risk management and related issues while the plan was prepared to address weaknesses in governance and expenditure processes.
An independent review identified significant and persistent weaknesses in Cbus' operational risk management framework, in addition to concerns related to insurance administration and outsourcing.
“APRA is also exploring possible breaches of the Superannuation Industry (Supervision) Act 1993 (SIS Act) by Cbus through an investigation with a focus on expenditure management practices,” the regulator said in a media release.
APRA Deputy Chair Margaret Cole said APRA expected trustees to have robust governance, compliance and risk management frameworks to prevent, detect and/or mitigate potential adverse outcomes such as operational risk incidents.
“Where an entity’s practices are found wanting, APRA will not hesitate to take action to protect members’ interests,” Cole said.
Cbus, which has about $100 billion under management for more than 920,000 members, has been embroiled in controversy since last year over governance, including payments to a union linked to organised crime and the selection of directors, along with mishandling insurance payouts to vulnerable members.