APRA hits Aus Ethical Super with license conditions
The Australian Prudential Regulation Authority (APRA) has imposed additional license conditions on Australian Ethical Retail Superannuation Fund over expenditure management.
The regulator said the imposition of the conditions followed intensified scrutiny of fund expenditure which included a review of the fund’s related party expenditure practices.
“APRA’s review identified deficiencies regarding the robustness of AES’s approach to related-party expenditure, particularly in relation to investment management agreements with its parent company, Australian Ethical Investments,” the announcement said.
“AES has not demonstrated that it has adequate processes to scrutinise and justify how the fees it pays to its parent company are consistent with the best financial interests of members.”
“Under the additional licence conditions, AES will be required to appoint an independent third party to review and recommend improvements to these outsourcing decisions and enhance compliance with key regulatory duties, and to implement any recommendations made.”
APRA Deputy Chair Margaret Cole said: “APRA expects trustees to have robust policies and procedures in place to uphold strong governance practices, appropriately manage conflicts and prioritise the financial interests of their members.”
“Implementation of the additional licence conditions will support improved outcomes for AES’s members and ensure that there is an appropriate level of independence, rigour and transparency regarding expenditure decisions.”
In a statement released directly after the APRA announcement, Australian Ethical said the additional conditions require AES to engage an independent expert to undertake a review of some related-party arrangements that exist between parent company Australian Ethical Investment Ltd (AEI) and AES.
“AES acknowledges the conditions, are committed to upholding the highest standards of governance and look forward to conducting the review.
“AES is confident that this issue has not negatively impacted members’ retirement savings and indeed the Fund has seen double digit returns across Balanced (MySuper), Growth, High Growth, Australian Shares and International investment options in the last financial year.
“Over the last 12 months, AES has proactively made changes to enhance its governance processes and will continue to do so,” the fund’s statement said.
As hilarious as this is, surely it pales in comparison to the vast amounts of money paid to organisations aligned with unions and union officials, by so called “Industry” super funds.
APRA please show us the investigations into Industry Super Funds for “related party expenditure practices”.
Or is it simply that ISF can do whatever they like with next to zero Regulations.
Regulatory Capture Corruption, ASIC, APRA and ISF’s.
Guess they forgot the “G’ in ESG.