The Australian Prudential Regulation Authority (APRA) has imposed additional licence conditions on I.O.O.F. Investment Management Limited (IIML), Nulis Nominees (Australia) Limited (NULIS), OnePath Custodians Pty Limited (OPC) and Oasis Fund Management Limited (Oasis), which are trustees of various superannuation funds within the Insignia Group (collectively, the Insignia Trustees).
The Insignia Trustees are owned by Insignia Financial Ltd and have approximately 2 million members and over $185 billion in funds under management between them.
The new registrable superannuation entity (RSE) licence conditions are designed to address governance and risk management deficiencies that were either identified during APRA’s ongoing prudential supervision of the Insignia Trustees or self-reported.
Most significantly, they include a breach by IIML of its obligation to undertake a timely transfer of member benefits to other funds1, and a breach by OPC of a previous APRA direction.
Under the terms of the new licence conditions, which come into force from today, the Insignia Trustees must:
- enhance their governance in relation to member outcomes, oversight of service providers, risk, compliance and managing conflicts of interest;
- appoint an independent expert to examine the operational effectiveness of their governance, accountability and risk management frameworks and practices; and
- rectify areas of concern with input from the independent expert.
Additionally, APRA requires:
- IIML to comply with its legal obligation in relation to the transfer of member benefits; and
- OPC to appoint an independent expert to provide root cause analysis and assurance in relation to the breach of APRA’s direction.
The new licence conditions partly supersede additional conditions imposed on IIML in December 2018 and NULIS in August 2020.
APRA Deputy Chair Margaret Cole said sound risk management and governance frameworks are integral to the management of a well-run superannuation fund.
"The Insignia Trustees make up the largest retail superannuation fund in Australia. As such, APRA expects a high standard of governance and risk management practices to ensure their members’ interests are protected.
"As the Insignia Trustees have grown substantially in recent years, it is important their governance and risk frameworks remain fit for purpose – especially given the group’s increased size and complexity. We particularly want to see improvements in the Insignia Trustees' whole system of governance and risk management, including practices, processes and frameworks, so that they are operating consistently and effectively," Ms Cole said.
1In relation to the transfer of member benefits to other funds under 6.34 and 6.34A of Superannuation Industry (Supervision) Regulations 1994 (Cth) (Portability Requirements).