APRA’s ability to disqualify super fund CEOs | Australian Markets

The Australian Prudential Regulation Authority (APRA) has acknowledged that it may well, in some circumstances, disqualify the chief govt of a superannuation fund.

APRA’s acknowledgement has come as half of a long-delayed reply to a query on discover from NSW Liberal Senator, Andrew Bragg prompted by decision-making within main industry fund Cbus.

Bragg had referenced proof given during Senate Estimates that Cbus chief govt, Kristian Fok was not concerned within the choice to commit $500 million to the Housing Australia Future Fund (HAFF) with the implication that the choice had been made by Cbus chair, Australian Labor Occasion president, Wayne Swan.

“I’m wondering from a governance point of view whether you would expect that the chief executive would be involved in committing members’ money to major projects or to major investments?” Bragg requested.

APRA stated that the duty to adjust to its Prudential Requirements fell to the superannuation fund itself however acknowledged its skill to behave.

“However, APRA can, in certain circumstances, seek to disqualify an individual from being a ‘responsible officer’ of an RSE licensee (which would include being a chief executive officer), or direct their removal to ensure they do not take part in the management or conduct of the business of the RSE licensee,” the regulator stated.

“Moreover, if an RSE Licensee has been discovered to have contravened sure provisions of the Superannuation Trade (Supervision) Act 1993 (SIS Act), motion could be taken towards a individual (similar to an govt officer) that has aided, abetted, counselled, procured, or induced that contravention.

“If the contravention is a civil penalty provision of the SIS Act there may be consequences for that person. APRA co-administers the SIS Act with ASIC and so either regulator may be able to take action depending on the circumstances of the case,” the APRA reply stated.

APRA famous that the Monetary Accountability Regime (FAR) which comes into impact for superannuation funds from 15 March “imposes a strengthened responsibility and accountability framework on RSE licensees (as accountable entities), and their directors and most senior executives (as accountable persons”.

“Where the RSE Licensee fails to comply with its accountability obligations, APRA or ASIC can apply to the court to impose a civil penalty on the entity,” it stated.

“Where an accountable person fails to comply with their accountability obligations, the RSE Licensee is required to reduce the person’s variable remuneration by an amount that is proportionate to the failure. APRA or ASIC can disqualify that person from being an accountable person if the seriousness of the failure justifies such disqualification.”

“Additionally, if an RSE licensee has been found to have contravened a civil penalty provision of the FAR, a civil penalty can be imposed on a person (such as an executive officer) that has aided, abetted, counselled, procured, or induced that contravention.”