Watchdog Orders HESTA Pension to Conduct Review After Outage
TL;DR
Australia's financial regulator APRA has ordered pension fund HESTA to conduct independent reviews after a severe seven-week outage harmed members, citing governance and risk management deficiencies.
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Australia’s financial regulator has ordered pension fund HESTA to conduct independent reviews following a prolonged outage that it said harmed members.
The Australian Prudential Regulation Authority imposed the extra license conditions after HESTA’s shift to a new administrative services provider triggered a “severe” disruption to member services, the regulator said Thursday. The outage lasted around seven weeks until the switch was completed in June.
APRA said it had “identified deficiencies in HESTA’s board governance and management of risks,” leaving the fund “inadequately prepared to effectively oversee and manage the transition.”
Under the conditions, HESTA must carry out separate independent reviews of its risk management framework and board effectiveness. HESTA is one of Australia’s largest superannuation funds with about A$100 billion ($67 billion) under management and more than one million members.
Read more: Watchdog Warns Australia Pension Funds on Private Asset Reports
Australia’s A$4.5 trillion pension industry has faced intense scrutiny from the nation’s twin regulators over issues from asset disclosure to customer service. Earlier this year, the Australian Securities and Investments Commission outlined 34 recommendations for reform, and has also taken legal action against funds.
“We take the matters raised by APRA very seriously and are cooperating fully with the regulator to resolve them,” HESTA Chief Executive Officer Debby Blakey said in a statement, while also apologizing to members who experienced delays.