Cbus Super, one of Australia’s largest superannuation funds, lacked proper procedures to ensure key expenses decisions were made in the best financial interests of its members, according to an independent review by Deloitte.
The consulting firm made 26 recommendations to improve oversight at the fund, the report which was posted on the Cbus website Dec. 3 said. It was made public as part of the Australian Prudential Regulation Authority’s additional license conditions placed on the fund.
“It is our assessment that lack of consistency, appropriate process, appropriate governance and necessary rigor, are all areas for improvement and currently lacking for the determination as to whether expenditure decisions have been made in the best financial interests of members,” according to the report. It was unable to conclude whether expenditure decisions were “sound and prudent.”
The assessment found the Cbus board directors met the fit and proper test, but said there were “deficiencies in governance” relating to the fund’s payments made to the Construction, Forestry, Maritime, Mining and Energy Union. The report examined hundreds of thousands of dollars of expenditure decisions relating to the CFMEU.
In August, APRA ordered the A$94 billion ($61 billion) Cbus to conduct an external review related to its close ties to a construction union facing serious allegations of misconduct.
Cbus said it would work with Deloitte to address the recommendations. “All 26 recommendations in the Deloitte independent review have been accepted in principle by the Cbus Board which fully cooperated with the independent review process,” Cbus said in its statement.
Australia’s booming A$4.1 trillion supers industry is facing scrutiny on multiple fronts. Regulators have regularly warned the sector to make sure it’s valuing unlisted assets appropriately. The industry is also facing pressure over standards of customer service and its preparedness for the coming wave of retirees. Cbus is facing a separate court case over delays in processing death benefits and insurance claims.
