The Australian Prudential Regulation Authority (APRA) has imposed additional licence conditions on H.E.S.T Australia Ltd (HESTA) to address concerns regarding HESTA's risk management and board governance during its recent transition of outsourced administration providers.
HESTA is one of Australia's largest superannuation funds with 1.1 million members and approximately $100 billion in funds under management.
The conditions follow 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.
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.
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." Ms Cole said.
