Following an investigation into expenditure and governance matters at EISS, the Australian Prudential Regulatory Authority has imposed additional licence conditions on the trustee in order to protect fund members.
The licence conditions, which take effect immediately, follow “persistent underperformance” that culminated in EISS’s MySuper product failing the first annual performance test in August.
The terms of the licence conditions 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.
“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,” said APRA member Margaret Cole.
“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, she noted, the best way for EISS to optimise outcomes for members 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,” Ms Cole said.
EISS made headlines last month after its chairman refused to issue an apology to members over a number of reported incidents within the fund.
Shortly after and following extensive due diligence, TWUSUPER announced it will not proceed with an earlier intention to merge with EISS.
The fund is now said to be “pursuing other growth options”.
