Cbus, valued at $100 billion and chaired by former Federal Treasurer Wayne Swan since January 2022, now faces expanded scrutiny regarding its expenditure management. This move comes as part of APRA's broader effort to ensure compliance with regulations governing Australia's $4 trillion superannuation sector.
Triggered by issues dating back to 2019, APRA recently secured a court-enforceable undertaking from United Super, the management firm behind Cbus, aiming to remedy the fund's risk management shortcomings. These concerns arose after a December prudential review highlighted failures such as "incomplete risk profiling and over-reliance on informal methods of risk management," according to APRA's report.
Adding to the issues, on Christmas Eve, United Super disclosed an insurance administration glitch involving its third-party service provider, prompting APRA to notify the Australian Securities and Investments Commission (ASIC). These revelations compound previous legal actions initiated by ASIC in November against United Super and its insurance partner, Australian Administration Services.
Within Australia's regulatory framework, APRA and ASIC serve as dual pillars. While ASIC oversees financial services, APRA focuses on the risk management comportment of superannuation funds. Regarding the intensified audit on Cbus, APRA Deputy Chair Margaret Cole remarked, “Where an entity’s practices are found wanting, APRA will not hesitate to take action to protect members’ interests.”
APRA's demands now include a comprehensive plan from United Super, crafted with advice from APRA-endorsed experts, to address these issues. This plan should integrate findings from previous APRA assessments and root cause analyses to ensure a robust resolution.
Significantly, United Super's board has been critiqued for displaying "insufficient oversight" and a lack of decisive action in rectifying identified risks. Comparisons drawn from prior reviews reveal striking consistencies, indicating a persistent negligence in governance standards.
The Sydney Morning Herald, which initially reported on Cbus’s management concerns, underscores the wider implications of this inquiry. The probing into Cbus signifies a broader intent by regulators to stem failures before they impact Australia's workforce who rely heavily on superannuation for their future.
This development raises questions not only about Cbus but also invites closer examination of governance and risk management frameworks across the superannuation landscape.
