APRA acts on Cbus over CFMEU allegations

The Australian Prudential Regulation Authority (APRA) has imposed additional license conditions on two key building industry superannuation funds in a direct reflection of allegations against the Construction, Forestry and Maritime Employees Union (CFMEU).

APRA said it had imposed the conditions on United Super Pty Ltd and BUSS (Queensland). United Super is the trustee of Cbus.

United Super is the trustee for the Construction and Building Unions Superannuation Fund (Cbus), which has approximately 923,000 members and $92 billion in funds under management. BUSSQ is the trustee for the Building Unions Superannuation Scheme and the BUSS (Queensland) Pooled Superannuation Trust and has approximately 73,000 members and $6.7 billion in funds under management.

APRA notes the recent public allegations regarding serious misconduct within the Construction, Forestry and Maritime Employees Union (CFMEU) and the steps taken by state and federal governments and the Fair Work Commission. While these allegations are yet to be tested or proven through a court or tribunal process, APRA 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. 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.

Under the additional licence conditions, 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.

The APRA statement said the CFMEU allegations have had wide coverage in the public domain and raise matters of significant public interest. Given this, to provide transparency and reassurance to members, it is APRA’s intention to require United Super and BUSSQ to publish the independent expert reports, subject to due process being followed.

Deputy Chair Margaret Cole said trustees are in a privileged position of managing billions of dollars of assets on behalf of their members. Compliance with these conditions allows Cbus and BUSSQ the opportunity to provide third party assurance to their members.

“APRA is prepared to take strong action to give members confidence that trustees are making decisions in their best financial interests. 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. 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.

Cbus later issued a statement from its chief executive, Kristian Fok in which it said it supported the APRA announcement that it undertake an independent review of the fund’s board governance and expenditure arrangements to ensure they remain appropriate and in the best financial interests of members.

“This independent review will build on work that Cbus has previously commenced,” Fok’s statement said.

“Cbus continues to work constructively with the regulator and will fully cooperate with the independent reviewer.”