Australia’s regulator has launched a formal investigation into Cbus, one of the nation’s largest super funds, over its expenditure management.
The probe follows an independent review by Deloitte in November that found the A$100 billion ($62.7 billion) fund lacked proper expense procedures. The Australian Prudential Regulation Authority has also accepted a court enforceable undertaking from Cbus to address concerns relating to risk management, it said in a statement Tuesday.
“APRA expects trustees to have robust governance, compliance and risk management frameworks in place,” APRA Deputy Chair Margaret Cole said. “Where an entity’s practices are found wanting, APRA will not hesitate to take action to protect members’ interests.”
The Deloitte review found “deficiencies in governance” relating to Cbus’s payments to the controversial Construction, Forestry, Maritime, Mining and Energy Union, which has close ties to the pension fund. The report examined hundreds of thousands of dollars of expenditure decisions relating to the CFMEU.
In a separate statement on Feb. 11, Cbus said the issues raised by APRA would “continue to be addressed” as part of its rectification plan.
“While we have made progress in some areas there is more work to be done, and it must be done at pace,” Cbus Chief Executive Kristian Fok said in the statement.
Australia’s A$4.1 trillion pension industry is facing scrutiny on multiple fronts, including over unlisted asset valuations, 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.
