The prudential regulator has placed three license conditions on trustees of EISS super to protect the best financial interests of its members, including the need for the fund to merge.
The Australian Prudential Regulation Authority (APRA) said in an announcement the conditions were to address concerns regarding its investigation into expenditure and governance matters and because it failed the Your Future, Your Super performance test.
The terms of the new licence conditions, which take effect immediately, require EISS to:
- Implement better expenditure processes and greater board oversight of fund expenditure;
- Review its expenditure and cease sponsorship arrangements and other expenditure that are not in the members’ best interests; and
- Implement a strategy to merge with a larger, better performing fund by 30 June, 2022, and report to APRA if the merger has not been executed by that date.
APRA member, Margaret Cole, said: "Being a trustee of an APRA-regulated super fund, and managing – and spending – billions of dollars of members’ money, is a privilege, not a right.
"Although our investigation into EISS’s expenditure is ongoing, we have sufficient concerns about the trustee’s ability to demonstrate that some decisions are in members’ best financial interests that we believe it’s necessary to intervene now. Further action may follow, depending on what the rest of the investigation uncovers.
"Ultimately, the best way for EISS to optimise outcomes for members of its struggling MySuper product is to transfer them to a more sustainable and better performing product as soon as possible. The new licence conditions ensure the trustee obtains independent advice and reports to APRA on progress before making a go-ahead decision for these members.”