The Australian Prudential Regulation Authority (APRA) has imposed additional licence conditions on Australian Ethical Superannuation Pty Ltd (AES), the trustee for the Australian Ethical Retail Superannuation Fund, to address concerns regarding its expenditure management.
The conditions follow APRA's intensified scrutiny of fund expenditure1 which has included an APRA review of AES'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. 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."
"Superannuation fund members should be able to expect that trustee expenditure decisions are made for the benefit of members. APRA will not hesitate to utilise the full force of its powers to hold trustees accountable to meet this obligation." Ms Cole said.
Footnotes
1APRA 22 October 2024 APRA intensifying supervision of fund level expenditure, and 24 June 2025 Superannuation expenditure outcomes: putting members' best financial interests first
