APRA hits HESTA with license conditions
The Australian Prudential Regulation Authority (APRA) has imposed additional license conditions on health industry fund HESTA over risk management and board governance concerns around its transition to outsourced administration.
The regulatory move is directly linked to the prolonged outage during HESTA’s recent administration changes.
The regulator said the imposition of the conditions followed the transition of HESTA’s administrative services to a new provider, finalised in June 2025, which resulted in a severe, prolonged disruption to member services and caused direct harm to members.
“APRA has identified deficiencies in HESTA’s board governance and management of risks which rendered HESTA inadequately prepared to effectively oversee and manage the transition,” the regulator said.
Under the conditions, HESTA is required to conduct separate independent reviews of its risk management framework and board effectiveness. The reviews will be comprehensive in scope and will consider HESTA’s management of the transition.
Commenting on the move, APRA Deputy Chair Margaret Cole said: “APRA expects trustees to demonstrate strong governance and risk management in their oversight of critical operations and material service providers. That responsibility is further heightened when a service that is critical to members is at risk.
“While some disruption is unavoidable when changing service providers, APRA expects that any transitions are well managed and do not result in any unnecessary impact on members ability to access their accounts. APRA’s imposition of licence conditions mean that HESTA is required to take prompt action to address deficiencies. APRA will utilise its powers to hold trustees accountable to meet their obligations to members.” she said.
HESTA chief executive, Debby Blakey issued a statement acknowledging the seriousness of the issues raised by APRA and said the fund was cooperating fully to resolve them.
“The change to a new administration platform in June was made with a long-term focus on delivering better, more personalised service to our members,” she said.
“Since the transition we have worked closely with our administration provider to seek to deliver the level of service our members expect and deserve. We are committed to implementing any potential improvements identified so we can better support our members now and into the future.”
Like getting slapped with a warm lettuce leaf.
I really have to wonder what the penalty would have been if this was a retail fund?
Only took six months