Earlier this month, the Australian Prudential Regulation Authority (APRA) agreed to a court-enforceable undertaking with the Construction and Building Unions Superannuation Fund (Cbus), requiring the fund to execute a major overhaul of its risk and governance programs.
The action stems from concerns over governance, risk management, and expenditure practices at United Super Pty Ltd, the trustee for Cbus. It also follows APRA's decision to impose additional license conditions on Cbus in August 2024 after an independent review identified “weaknesses in governance and expenditure processes.”
The agreement requires Cbus to undertake a holistic risk transformation program to rectify what APRA calls "significant and persistent weaknesses" in operational risk management. Cbus must engage independent experts, develop an integrated remediation plan, and appoint an independent reviewer to oversee implementation. The remediation plan must address what APRA describes as “fundamental deficiencies across policies, practices, governance and oversight.”
"APRA is prepared to take strong action to give members confidence that trustees are making decisions in their best financial interests," said APRA Deputy Chair Margaret Cole. "APRA expects trustees to have robust processes, policies and procedures in place to ensure they are upholding strong governance practices and complying with the best financial interests duty and fit and proper obligations, as set out in APRA's prudential standards."
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