In a statement on Wednesday, the Australian Prudential Regulation Authority (APRA) said it has imposed additional licence conditions on United Super, the trustee for Cbus, and BUSSQ, the trustee for the Building Unions Superannuation Scheme and the BUSS (Queensland) Pooled Superannuation Trust, to address concerns regarding “fitness and propriety processes and fund expenditure management”.
Citing recent public allegations of serious misconduct within the Construction, Forestry and Maritime Employees Union (CFMEU) and subsequent steps taken by governments and the Fair Work Commission, APRA said it “is concerned about the potential impact on trustees”.
“The CFMEU is a shareholder of United Super and has appointed three directors to its 14-member board,” it said.
“The Construction, Forestry, Mining and Energy Industrial Union of Employees, Queensland (CFMEU-Q), a separate legal entity to the CFMEU, is a shareholder of BUSSQ and has appointed four directors to its eight-member board, three of whom are also CFMEU officers,” APRA noted.
Under the additional licence conditions, the trustees are expected to review their compliance with the duty to act in the best interests of their members, APRA said.
“United Super and BUSSQ are each required to engage an independent expert to conduct a review in relation to the requirements under Prudential Standard SPS 520 Fit and Proper and the trustees’ compliance with the duty to act in the best financial interests of beneficiaries of the funds in making expenditure decisions,” it said.
Given the CFMEU allegations raise matters of “significant public interest”, APRA said United Super and BUSSQ will be required to publish these independent expert reports.
“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.
“Fulfilment of the requirements under the additional licence conditions will support improved outcomes for members and ensure that there is an appropriate level of independence, rigour and transparency in relation to United Super and BUSSQ’s compliance with the law.”
She noted trustees are in a “privileged position of managing billions of dollars of assets on behalf of their members”, with Cbus managing some $92 billion in funds under management on behalf of its approximately 923,000 members. Meanwhile, BUSSQ Super has approximately 73,000 members and $6.7 billion in funds under management.
“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,” Cole said.
In a statement, Cbus Super CEO Kristian Fok said the fund supports APRA’s decision for it to undertake an independent review of its board governance and expenditure arrangements “to ensure that they remain appropriate and in the best financial interests of our members”.
“This independent review will build on work that Cbus has previously commenced,” Fok said.
“Cbus continues to work constructively with the regulator and will fully cooperate with the independent reviewer.”
The CEO added: “We note the allegations of criminal activity in the building and construction sector, and we condemn such activity. We support efforts by governments, regulators, and union organisations to eradicate such criminal behaviour.”
