Fund Go Policies and Pr oc

Transcription

Cbus
Manual
Fund Governance
Policies and
Procedures Manual
Date of this Policy:
26 August 2014
Cbus’ Trustee: United Super Pty Ltd
ABN 46 006 261 623 AFSL 233792
Cbus ABN 75 493 363 262
MySuper authorisation
75 493 363 262 473
08/14
Contents
Introduction
2
01Transparency
3
02Roles and
Responsibilities4
03 Code of Conduct
6
04Legal and regulatory
Framework7
05 Trustee director duties10
06 Prudential Standards14
07 Indemnification
and Insurance
19
08 Fit and Proper Policy 20
09Board and Committee
Composition27
10Board Renewal and
Review Policy
28
11Meetings
30
12Reporting Sensitive
Information (Whistle
blowing) policy
32
13Policy Governance
framework35
Attachment 01: Skills Sets
36
Attachment 02: Skills matrices
42
Attachment 03: Propriety Factors 44
Attachment 04: Regulators
45
Revision History
Relaunch of the Fund Governance Policy June 2011
Annual Review-Minor amendments August 2012
Incorporation of Stronger Super
reforms and Prudential Standard
requirements July 2013
Edit updates and changes to Meeting of
the Chairs and Board review sections
August 2014
Fund Governance Policies and Procedures Manual | 1
Cbus
Manual
Introduction
Welcome to Cbus. The industry
superannuation fund focused on the building,
construction and allied industries.
United Super Pty Ltd is the Trustee
Company (“the Trustee”) of Cbus
(the” Fund”). The Trustee is the legal
entity responsible for the prudent
management of the Fund.
It is essential that a Trustee has a
sound governance framework and
conducts its affairs with a high degree of
integrity. A culture that promotes and
supports good governance, benefits
all stakeholders and helps to maintain
public confidence in the Fund.
The Trustee must also ensure the
Fund is governed well so it can meet its
members’ expectations and discharge
its duties to beneficiaries. The Cbus
Fund Governance Policy outlines the
key elements of Cbus’ governance
framework.
Fund Governance describes the
corporate governance frameworks
within Trustee companies of
superannuation funds to distinguish
its own internal framework and
responsibilities as distinct from a
Trustee’s oversight role of other
companies’ corporate governance
as an investor.
It encompasses the mechanisms
by which Funds and those in control are
held to account. Governance influences
how the objectives of the Fund are set
and achieved, how risk is monitored
and assessed, and how performance is
optimised.
The Trustee undertakes to review this
policy annually or as soon as practicable
if there is a change in legal or other
regulatory requirements that may
impact this policy.
01
Transparency
The Trustee supports an open and transparent communication
program to its members, employers and other stakeholders on how
the Fund is governed and performing.
This program includes:
■■
Strategic and operational –
reporting on our strategic objectives,
complaints management, member
and employer research undertaken.
■■
Investments – reporting on
performance, where the Fund
monies are invested, information on
the Fund’s environmental and social
governance polices, voting activity,
full disclosure of all investment
costs, plain English explanation
of investments concepts like risk
and return.
■■
Governance – information on who
the Directors, CEO and executive
management of the Fund are,
disclosure of Director, CEO and
executive remuneration, training,
conflict management policies and
registers of interests and duties, role
of the board, and its committees,
Fund Chair, CEO and executive
management. How performance
is reviewed, code of conduct, and
information on gender diversity.
■■
Financial and Risk Management –
the provision of the annual financial
statements and audit report on-line,
statements as to the accuracy of
financials, information on the risk
management framework and reviews
and audits thereof.
02
Roles and Responsibilities
The primary purpose of the Fund is to maximise retirement benefits
for its members. The Trustee is accountable to its members, and other
stakeholders to provide those benefits. The primary source of the
Trustee’s power are the Trust Deed (Governing Rules) of the Fund and
the Company’s Articles of Association.
Role of the Trustee
The Board of the Trustee is ultimately
responsible for the sound and prudent
management of the Trustee’s business
operations.
It is the role of the Board to make
informed decisions in the best interest
of beneficiaries of the Fund, to set the
strategic direction and objectives of
the Fund to enable it to maximise the
retirement benefits for its members,
and to review and measure performance
of adopted strategies against the
defined measures. The Board reviews
and approves significant policies and
frameworks of the Trustee and satisfies
itself that an effective system of risk
management and internal control is
established and maintained.
A Board Charter is in place which sets
out the authority, responsibilities,
membership and operation of the
Trustee Board.
The Board, in fulfilling its functions,
delegates authority to management to
act on behalf of the Board with respect
to certain matters . This delegation
of authority is clearly set out and
documented in Job descriptions and
the Delegations Register.
The Board recognises that it cannot
abrogate its responsibility for functions
delegated to management.
Role of the CEO and
Executive Management
■■
Ensuring stakeholders are advised
of significant developments and are
consulted as appropriate.
Management is charged with the day
to day operations of the Fund and
implementation of the agreed upon
strategic direction and objectives of the
Fund.
■■
Establishing the Board agenda in
conjunction with the CEO.
■■
Ensuring the Board has the
necessary information to make
effective and appropriate decisions.
The CEO reports to the Board, appoints
the executive management team and
provides leadership to the executive
management team and Fund Staff. The
CEO is responsible for the performance
of the approved Business Plan of the
Fund.
■■
Ensuring Board minutes properly
reflect Board discussions, outcomes
agreed and decisions taken.
■■
Ensuring, as far as practicable, that
he/she has a full understanding of all
major issues facing the Fund.
■■
Liaising with the CEO and Executive
to obtain necessary information and
to provide counsel and advice.
■■
Dealing with urgent business that
arises between Board meetings and
advising the Board of any actions
taken.
■■
Overseeing the annual and triennial
Board performance evaluation
process.
The Executive Management team
report directly to the CEO and prepare
reports to the Board on all aspects
of Fund Operations. The Executive
Manager, Governance & Risk has a
reporting line to the Fund Chair and the
Chair of the Audit & Risk Management
Committee.
The Fund’s organisational chart sets
out clear reporting lines and areas
of responsibilities. Detailed job
descriptions are in place for all positions.
The Board’s key objective is to ensure
that it continues to meet its role and
responsibilities as outlined in the Board
Charter. The Board will be assessed
against this objective on an annual basis.
It is a key objective of the Board’s
Committees to ensure they continue
to meet their roles and responsibilities
as outlined in respective Committee
Charters. Committees will be assessed
against this objective on an annual basis.
Fund Chair
The Fund Chair is responsible for:
■■
Providing leadership to the Trustee
Board.
■■
Managing meetings of the Trustee
Board to ensure that all necessary
decisions are made, and to facilitate
the effective contribution of all
Board members.
■■
Ensuring the integrity and
effectiveness of the governance
processes of the Board.
Board objectives
Committee Objective
Cbus
Manual
Roles and
Responsibilities
Committee Chairs
A Committee Chair is responsible for:
Individual Director’s
Objectives
Fees
Alternate Directors receive the same
fees as Directors where they attend
a board meeting in place of a Director
and for their attendance at Committee
meetings where they are a member of
the Committee.
■■
Providing leadership to the
Committee.
Key objectives for individual Directors
include:
■■
Establishing the Committee agenda
in conjunction with the appropriate
executive manager.
■■
Meeting the required skill levels
within the required time periods;
■■
■■
Ensuring the Committee has the
necessary information to make
effective and appropriate decisions.
■■
Managing meetings of the
Committee to ensure that all
necessary decisions are made,
and to facilitate the effective
contribution of all Board members.
Meeting ongoing performance
development hours; Attending
meetings of the Board and
appointed Committees in
accordance with the Trustee’s policy
on meeting attendance;
■■
■■
Ensuring the Committee minutes
properly reflect Committee
discussions, outcomes agreed and
decisions taken.
Ensuring, as far as practicable, that
he/she has a full understanding of all
the major issues in the Committees’
sphere of responsibility.
■■
Complying with the Trustee Code of
Conduct (refer to section 3); and
■■
Contributing to Board and
Committee deliberations and the
overall direction of the Trustee.
Alternate Directors appointed to
Committees must meet the minimum
training standard within 12 months
of appointment to the Committee
and meet the ongoing training
requirements.
Secretariat
The secretariat function is performed
by the Office of the CEO and the
Governance & Risk department.
The CEO and Executive Manager,
Governance & Risk are company
secretaries of the Trustee Company.
Individual Directors will be assessed
against these objectives on an annual
basis.
Alternate Directors
Liaising with the CEO and relevant
executive managers to obtain
necessary information and to
provide counsel and advice.
Purpose and Role
■■
Dealing with urgent business that
arises between Committee meetings
and advising the Committee or Board
of any actions taken.
■■
Overseeing the annual Committee
performance evaluation process.
Alternate Directors are allowed to be
members on Board Committees. An
Alternate Director is not entitled to vote
at a meeting of a Committee unless
they are a member of the Committee
in their own right.
■■
Training
Alternate Directors are allowed under
the Articles of Association.
The CEO office is responsible for the
preparation, distribution and safe
keeping of Board papers and minutes,
and Director professional development
training records. The Office also
oversees the governance standards
and practices of the secretariat.
The Governance & Risk Business
Unit is responsible for ensuring
compliance with this policy and its
ongoing review. Responsible Person
appointments, maintenance of the
Register of Interests and Duties,
Board, Committee and Director Review
processes, reporting and notifications
to the regulator/s, and maintenance of
company records.
03
Code of Conduct
Taking into consideration the functions and duties of the Trustee, the
following Code of Conduct has been formulated to be adhered to by all
Responsible Persons:
■■
To act honestly in all matters
concerning the Fund;
■■
To exercise due care, skill and
diligence;
■■
■■
■■
■■
– To prepare thoroughly for all
meetings by reading Board and
Committee papers;
To ensure that all decisions made by
the Board and Management are in
the best interests of all beneficiaries;
– To actively participate in
and contribute to Board and
Committee deliberations;
To comply with the Trust Deed of
the Fund and to ensure that the Fund
complies with all legal requirements;
To understand and oversee the
key elements and operation of the
following frameworks established by
the Trustee:
– Governance Framework;
– Investment Governance
Framework;
To comply with the Governance
policies of the Fund including the
Conflicts Management Policy;
– To exercise independent
judgment;
Access to Legal Advice
– To accept the authority of the
Chair when appropriately applied.
– Conflicts Management
Framework;
■■
To maintain confidential information
of the Fund;
■■
To promote and represent the Fund;
■■
To obtain all necessary information
to enable informed participation
in decision making at Board level,
to attend Board and Committee
meetings and participate in decision
making at Board and Committee
level;
■■
To meet the skill levels required
under the Fit and Proper policy
within the required time periods;
■■
To participate in ongoing
professional development training
in order to meet specified training
hours;
To attend all meetings of the Board
and appointed Committees in
accordance with the Trustee’s policy
on meeting attendance (refer to
section 11);
■■
■■
If a Director believes that he or
she requires legal advice in their
capacity as a Director of Cbus or
as a nominee Cbus Director, they
should endeavour to obtain prior
approval from the Fund Chair before
obtaining such advice (unless other
circumstances dictate);
■■
In making application to the Fund
Chair, the Director should provide
the reasons why they believe they
require independent legal advice,
name of the legal firm and a quote
for legal costs; and
■■
If the Fund Chair does not approve
the application for the Fund to meet
the cost of the legal advice, the
Director can make application to the
Board for consideration; or proceed
with obtaining the legal advice and
make subsequent application to the
Board for the cost of the legal advice
to be met.
Where appointed as a Cbus nominee
on a subsidiary or external Board:
– To read reports and documents
in preparation for meetings;
– To participate in decision making
at Board level; To attend Board
meetings; and
– Report to Cbus on the activities
of the subsidiary/external body.
■■
The Fund Chair has the right to obtain
independent professional advice at
the Fund’s expense. There may also
be circumstances in which individual
Directors are entitled to obtain
independent professional advice, at
the Fund’s expense, in the conduct
of their duties.
The following is the agreed upon
process to be followed:
To ensure that any queries or
matters of concern raised by
the Regulators are addressed
appropriately;
■■
■■
Confidential information received by
a Responsible Person remains the
property of the Fund and it is improper
to disclose it or allow it be disclosed,
unless that disclosure has been
authorised by the Board or is required
by law.
All Directors and staff are required to
complete a Confidentiality Agreement
prior to their appointment.
– To treat other Board/Committee
members (and visitors to
meetings) with due respect;
– Insurance Management
Framework; and
Confidentiality
– To allocate the scheduled time
of meetings exclusively for that
purpose;
– To ensure there are no distractions
from electronic communication
devices at meetings;
– Risk Management Framework;
■■
To observe the following code of
conduct at all Board and Committee
meetings:
To comply with the Code of Conduct.
04
Legal and Regulatory
Framework
This section outlines the major legal and regulatory requirements
that Responsible Persons must be aware of when making decisions
in relation to the Fund.
This is not an exhaustive list of all legal
and regulatory requirements that
are applicable; rather it focuses on
the major elements that Responsible
Persons should be cognisant of when
making decisions in relation to the Fund.
Prudential Regulation
The framework for the prudential
regulation of superannuation by APRA
is comprised of three tiers, namely:
■■
Any changes to legal or regulatory
requirements that impact on the
Fund are reported to the Board by
the Executive Manager, Governance
and Risk.
The regulation of superannuation in
Australia is primarily carried out by
the Australian Prudential Regulation
Authority (‘APRA’). APRA’s powers to
make and enforce Prudential Standards
are contained in the SIS Act which
represents the principal piece of
legislation governing the prudential
management of superannuation.
It is important to note that the Trustee
is also subject to a range of other
legislative requirements overseen by
a number of other regulators. These
requirements are described at a
high-level within this section. The
various government bodies responsible
for regulating different components
of a superannuation Fund’s operations
are summarised at Attachment 4.
The SIS Regulations set out a number
of operating standards which set
out rules covering a wide range of
matters concerning the operation of
superannuation funds including, but not
limited to:
■■
■■
primary legislation, being
the Superannuation Industry
Supervision Act (‘SIS Act’), which
outlines high- level obligations,
high-level definitions and APRA’s
enforcement powers;
subordinate legislation, in the form
of relevant SIS Regulations and
prudential standards, which contain
more detailed requirements on
prudential matters; and
guidance material, in the form of
Prudential Practice Guides, which
supports the obligations and
requirements contained in the
primary and subordinate legislation,
in particular, APRA’s prudential
standards.
■■
Benefit payments and preservation;
■■
Transfers of benefits;
■■
Contributions;
■■
Pensions;
■■
Charging of fees; and
■■
Disclosure.
Sole Purpose Test – Section 62
The Sole Purpose Test provides that a
regulated superannuation fund must be
maintained solely for at least one of the
legislated core purposes and for one or
more of the ancillary purposes.
It is a contravention of the Sole Purpose
Test for a superannuation fund to be
maintained only for ancillary purposes.
Core Purposes
Superannuation Industry
(Super vision) Act
The object of the Act is to make
provision for the prudent management
of superannuation funds and for their
supervision by APRA.
The SIS Act covers a broad range of
matters including, but not limited to:
■■
Trustee duties (refer to section 5);
■■
APRA’s supervisory and
enforcement powers; Licensing of
Trustees and Funds;
■■
Rules governing investment
activities;
■■
Accounts, audit and reporting
obligations;
■■
Rules relating to MySuper products;
and
■■
Offence provisions.
■■
Provision of benefits for each
member on or after the member’s
retirement;
■■
Provision of benefits for each fund
attaining age 65;
■■
Provision of benefits to the legal
personal representative and/or the
dependants of a fund member on or
after the death of the member, prior
to retirement or attaining age 65.
Cbus
Manual
Legal and
Regulatory Framework
Ancillary Purposes
■■
member on or after termination
of employment (resignation,
retrenchment etc.).
■■
temporary or permanent cessation
of work on account of physical or
mental health.
■■
■■
Provision of benefits in respect of a
deceased member, to the member’s
legal personal representative and/
or dependants where the member
dies after retirement (reversionary
benefits).
■■
■■
■■
Registrable Superannuation Entity
Licence (RSE)
RSE Licence Standard Conditions
Conditions imposed on all licensees
include the following:
■■
Must comply with RSE licensee law
(which includes the SIS Act and
Regulations, Prudential Standards,
Financial Sector (Collection of
Data) Act, Financial Institutions
Supervisory Levies Collection
Act and certain provisions of the
Corporations Act);
■■
The duties of the Trustee in respect
of the Fund must be property
performed by the Trustee;
■■
Must ensure the Fund is registered;
■■
The Trustee of a public offer
fund must be a constitutional
corporation;
The Trustee is subject to a range of
other legislation overseen and enforced
by different Regulators. A summary
of these Regulators is contained in
Attachment 4.
Notify APRA of any change in the
Responsible Persons within 14 days
of the change taking place; and
Australian Financial Services
Licence (AFSL)
Must comply with any other
conditions prescribed by the
regulations.
RSE Licence Additional Conditions
■■
Provision of such benefits as APRA
approves in writing.
Under SIS Trustees are required to
hold a RSE licence issued by APRA and
ensure their Fund is registered with the
regulator. The Trustee’s RSE Licence
was granted on 21 January 2006 and the
Fund was registered on 1 February 2006.
Other legislation
The Trustee must establish rules
for identifying on at least an annual
basis duplicate member accounts
in the Fund and merging those
accounts if it is in the best interests
of the member to do so;
■■
Maintain a balance of at least
$250,000 in an administrative
reserve account which must be
audited annually and a certificate
provided to APRA within 4 months of
the end of the Financial year. (Note
that this RSE Licence obligation
will continue up until the date the
Trustee has built up sufficient
resources to meet the Operational
Risk Financial Requirement target
amount for the first time – see ORFR
section under Prudential Standards).
All assets of Cbus including all
bank accounts must be custodially
held. (note exceptions are in place
for the Art Collection and Office
equipment).
The Trustee holds an AFS licence
to carry on a financial services
business, to deal in a financial product
(superannuation only) and provide
general financial product advice for the
following classes of financial products:
■■
Basic Deposit products;
■■
Life risk insurance products;
■■
Managed investments schemes; and
■■
Superannuation.
As an AFS licensee the Trustee has the
following general obligations as outlined
in Section 912A of the Corporations Act:
■■
Do all things necessary to ensure
that the financial services covered
by the licence are provided
efficiently, honestly and fairly;
■■
Have in place adequate
arrangements for the management
of conflicts of interest that may
arise wholly, or partially, in relation to
activities undertaken by the licensee
or a representative of the licensee
in the provision of financial services
as part of the financial services
business of the licensee or the
representative;
■■
Comply with the conditions on
the licence; Comply with financial
services laws;
■■
Take reasonable steps to ensure that
its representatives comply with the
financial services laws;
■■
Maintain the competence to provide
those financial services;
Authorisation to offer a MySuper
product
The Federal Government has passed
legislation with the aim of creating a new
simple, low cost default superannuation
option. MySuper aims to improve
the simplicity, transparency and
comparability of default superannuation
products.
In order to offer a MySuper option,
Trustees must be granted an
authorisation from APRA.
The Fund was granted an authorisation
to offer a MySuper option on
18 February 2013. Cbus’s MySuper
investment option is called ‘Growth
(Cbus MySuper)’.
Cbus
Manual
Legal and
Regulatory Framework
■■
Ensure that its representatives
are adequately trained, and are
competent, to provide those
financial services;
■■
Have a dispute resolution system
that complies with
■■
ASIC requirements; and
■■
Comply with any other obligations
that are prescribed by regulations.
Under the AFS licence regime the
company must nominate natural
persons to act as Responsible Managers
in respect of that licence. These
responsible managers are the people
relied on to demonstrate to ASIC
that the licensee had the requisite
knowledge and experience to provide
the financial service. The Responsible
Managers are those responsible
for significant day-to-day business
decisions, including compliance
arrangements. The Responsible
Managers for the Trustee’s AFS licence
are: David Atkin, Angela Thurstans,
Maria Butera, Trish Donohue and
Stephen Spiller.
Responsible Persons will, in the
course of their duties, have access to
personal and sensitive information
about Directors, staff, members and
employers of the Fund. All Responsible
Persons must ensure that such
information is treated confidentially and
in accordance with the APPs and the
Fund’s Privacy Statement.
Anti-Money Laundering and
Counter Terrorism Financing
(AML/CTF)
The AML CTF program consists of the
following two parts:
The established procedures enable the
trustee to identify members (and their
agents), and to be reasonably satisfied
that a member is who they claim to be.
Oversight by the Board and Senior
Management
The Fund’s Audit & Risk Management
Committee oversees this program.
Part A – outlines the general
requirements of the program.
The purpose of Part A is to identify,
mitigate and manage the moneylaundering and counter terrorism
financing risks that the Fund may face
in the provision of its designated
services. This includes:
■■
The risk management framework
that includes processes for
identification, assessment and
treatment of risks;
■■
screening employees prior
to engagement and ongoing
monitoring of staff;
■■
a training program for both Directors
and employees in AML/CTF trends,
risk-based processes and the
consequences of non-compliance;
and
■■
ongoing customer due diligence
including monitoring of customer
transactions.
Privacy Law
The privacy laws require the Fund to
comply with the Australian Privacy
Principles (APPs). The APPs are thirteen
legislative benchmarks that prescribe
minimum privacy standards for the
handling of personal information. The
legislation regulates the collection, use
and disclosure of ‘personal information’.
This is information or an opinion about
an individual where the identity of
that individual is either apparent or
reasonably ascertainable from the
information or opinion in question.
Part B – outlines member identification
procedures and it sets out the Trustee’s
processes for the collection of minimum
member information and verification of
that information through appropriate
documentation.
05
Trustee Director Duties
All Trustee Directors must have a good understanding of the SIS
covenants and be able to apply them when making decisions.
General SIS covenants:
5. To act fairly in dealing with classes
of beneficiaries within the Fund;
Investment covenants:
1. To act honestly in all matters
concerning the Fund;
6. To act fairly in dealing with
beneficiaries within a class;
2. To exercise, in relation to all matters
affecting the Fund, the same degree
of care, skill and diligence as a
prudent superannuation trustee
would exercise in relation to an
entity of which it is Trustee and on
behalf of the beneficiaries of which
it makes investments;
7. To keep the money and other assets
of the Fund separate from any other
money and assets;
– That are held by the Trustee
personally; or
– That are money or assets, as the
case may be, of an employersponsor, or of an associate of the
employer-sponsor, of the Fund.
Trustees are required to exercise
diligence and scrutiny in determining
and implementing investment
strategies for the Fund and for each
investment option offered. The SIS Act
sets out a range of factors that must
be considered in order for a Trustee to
discharge its duties to members with
respect to investment decisions. These
covenants include the following duties:
3. To ensure that the Trustee’s duties
and powers are performed and
exercised in the best interests of
the beneficiaries;
4. Where there is a conflict between
the duties of the Trustee to the
beneficiaries, or the interests of
the beneficiaries, and the duties of
the Trustee to any other person or
the interests of the Trustee or an
associate of the Trustee:
– to give priority to the duties to
and interests of the beneficiaries
over the duties to and interests
of other persons;
– to ensure that the duties to the
beneficiaries are met despite the
conflict;
– to ensure that the interests
of the beneficiaries are not
adversely affected by the
conflict; and
– to comply with the prudential
standards in relation to conflicts.
8. To not enter into any contract, or do
anything else, that would prevent
the Trustee from, or hinder the
Trustee in, properly performing or
exercising the Trustee’s functions,
and powers;
9. To ensure where there are reserves
of the Fund – a policy is formulated
and to give effect to a strategy
for their prudential management,
consistent with the Fund’s
investment strategy and its capacity
to discharge its liabilities (whether
actual or contingent) as and when
they fall due; and
10.To allow a beneficiary access to
any prescribed information or any
prescribed documents.
1. To formulate, review regularly and
give effect to an investment strategy
for the whole of the fund, and for
each investment option having
regard to:
– the risk involved in making,
holding and realising, and
the likely return from the
investments having regard to
the Trustee’s objectives and
to the expected cash flow
requirements in relation to the
fund;
– the composition of the
investments including the extent
to which the investments are
diverse or involve the fund in
being exposed to risks from
inadequate diversification;
– the liquidity of the investments
having regard to the expected
cash flow requirements in
relation to the fund;
– whether reliable valuation
information is available in relation
to the investments;
– the ability of the fund to
discharge its existing and
prospective liabilities;
– the expected tax consequences
for the fund in relation to the
investments; and
– the costs that might be incurred
by the fund in relation to the
investments; and any other
relevant matters.
Cbus
Manual
Trustee Director
Duties
2. To exercise due diligence in
developing, offering and reviewing
regularly, each investment option;
3. To ensure the investment options
offered to each beneficiary allow
adequate diversification.
Insurance covenants:
In respect of the provision of
insured benefits to beneficiaries,
superannuation Trustees have specific
duties:
give effect to an insurance strategy
for the benefit of beneficiaries that
addresses each of the following
matters:
– the kinds of insurance that are to
be offered;
– the level, or levels, of insurance
cover to be offered;
– the basis for the decision
to offer insurance of those
kinds, with cover at that level
or levels, having regard to the
demographic composition of the
beneficiaries of the entity;
– the method by which the insurer
is, or the insurers are, to be
determined;
2. To consider the cost to all
beneficiaries of offering insurance
of a particular kind, or at a particular
level;
3. To only offer or acquire insurance of
a particular kind, or at a particular
level, if the cost of the insurance
does not inappropriately erode the
retirement income of beneficiaries;
4. To do everything that is reasonable
to pursue an insurance claim for
the benefit of a beneficiary, if the
claim has a reasonable prospect of
success.
Covenants relating to risk:
Duty to Promote
With respect to the management of
risk, the SIS Act requires Trustees:
give effect to a risk management
strategy that relates to:
– the activities, or proposed
activities, of the Trustee, to the
extent that they are relevant
to the exercise of the Trustees’
powers, or the performance
of the Trustees’ duties and
functions, as Trustee of the
entity; and
– the risks that arise in operating
the entity.
2. To maintain and manage in
accordance with the prudential
standards a reserve to cover the
operational risk that relates to the
entity.
MySuper obligations:
There are also additional specific duties
that apply to Trustees of funds that
offer MySuper products. This is because
MySuper members or ‘default members’
generally delegate all aspects of their
superannuation to the Trustee.
Additional obligations for MySuper
Trustees include the following duties:
1. To promote the financial interests of
MySuper beneficiaries, in particular
returns to those beneficiaries (after
the deduction of fees, costs and
taxes);
2. To annually assess sufficiency of
scale to offer a MySuper product;
and
3. To include in the MySuper
investment strategy:
The duty to promote the financial
interests of MySuper members is not
a requirement to generate a certain
level of returns. Sustained low returns
may indicate a failure to discharge this
duty, but low returns, on their own, will
not necessarily involve a breach of this
obligation. It is also important to note
that this obligation does not imply that
MySuper members should be given
preference over any other members of
the Fund in any way.
Breaches of Directors’ duties:
Actions
A person may bring an action to
recover loss or damage against an
individual Director for a breach of a
Director’s covenant including a MySuper
obligation. Before being able to bring such
an action against a Director, the person
must be granted leave by the court.
Leave to commence an action may be
sought any time within 6 years after the
day the alleged breach occurred.
In making its decision, the court will
consider whether the person bringing
the action is acting in good faith and
whether there is a serious question to
be tried.
Defences
Defences are available to a Director
in respect of civil claims for loss or
damage as a result of a contravention
of a Director’s covenant or a MySuper
obligation if the contravention was:
■■
due to a reasonable mistake; or
■■
due to reasonable reliance on third
party information; or
■■
due to:
– an investment return target over
a period of 10 years; and
(a) the act or default of a third party;
or
– the level of risk appropriate to
the strategy expressed in terms
of the expected frequency of
negative returns over a 10 year
period.
(b) an accident; or
(c) some other cause beyond the
Director’s control; and
the Director took reasonable
precautions and exercised due
diligence to avoid the contravention.
Cbus
Manual
Trustee Director
Duties
Directors also have a defence to an
action for loss or damage suffered by a
person as a result of the making of an
investment where they can establish
compliance with the relevant covenants
and MySuper obligations that apply in
relation to each act, or failure to act,
that resulted in the loss or damage. A
similar defence is available to an action
for loss or damage suffered by a person
as a result of the management of any
reserves.
Infringement notices
From 1 July 2013, the SIS Act will grant
APRA the power to issue infringement
notices for certain breaches of the Act
occurring on or after 1 July 2013. These
infringement notices are designed to
provide a fast and effective remedy,
proportionate to the alleged breach.
APRA has a 12 month time limit within
which infringement notices must be
given. An infringement notice may be
given where an infringement officer has
reasonable grounds to believe that a
person has contravened an enforceable
provision.
Examples of provisions in the Act to
which infringement notices will apply
include:
■■
■■
■■
not notifying as soon as practicable
each beneficiary about an acting
Trustee’s appointment;
not having rules in place for the
appointment of member or
independent representatives where
required to do so; and
not meeting APRA’s deadline for
receipt of a report relating to an
investigation.
Provisions in the Act jointly administered
by APRA and the ATO will also be
enforceable, except where the offence
relates to an SMSF. In addition, further
offences may be included by way of
regulations.
Persons receiving infringement notices
can choose to pay the amount as an
alternative to having court proceedings
brought against them. The amount
of an infringement notice is one fifth
of the maximum penalty that a court
could impose for that contravention.
Once an infringement notice is paid, the
liability is taken to be discharged, and
the person is not regarded as having
been convicted of the offence specified
in the notice. However, if the person
chooses not to pay the amount, court
proceedings can be brought against
them in relation to the contravention.
An infringement notice may
be withdrawn after taking into
account factors such as any written
representations seeking the withdrawal,
and the circumstances of the alleged
contravention. Where a notice is
withdrawn, notice of the withdrawal
must be given.
Corporations Act
A Director or other officer of a
corporation must exercise their powers
and discharge their duties with the
degree of care and diligence that a
reasonable person would exercise if
they were in a similar position. s.180(1)
corporation must exercise their
powers and discharge their duties (a)
in good faith in the best interest of
the corporation; and (b) for a proper
purpose. s.181(1)
A Director, secretary, other officer
or employee of a corporation must
not improperly use their position or
information gained by virtue of their
position to gain an advantage for
themselves or someone else; or cause
detriment to the corporation. s.182,
s.183 & s.184
It is a criminal offence if a Director
dishonestly breaches these duties
under the Corporations Act. s.184
Common Law Duties
While the SIS covenants incorporate
some common law duties, common law
duties are enforced separately to the
duties in SIS.
■■
To act solely in the interests of
beneficiaries of the trust;
■■
To invest the trust funds to benefit
the members of the fund;
■■
To exercise reasonable care and skill
(of a prudent business person);
■■
Not to derive a profit or benefit
directly or indirectly from the trust;
■■
Not to purchase or lease property
from the trust;
■■
To act personally and not to
delegate;
■■
To avoid all conflicts of interest;
■■
To keep accounts and give
information to beneficiaries;
■■
To act impartially between
beneficiaries; and
■■
To observe the terms of the trust
(the governing rules).
Liability
Section 197 provides that Directors of
a Trustee company are personally liable
for the debts of a Trustee if:
■■
The Trustee does not or cannot
meet a debt for which the Trustee is
liable; and
■■
The Trustee is not entitled to be
indemnified against the liability from
the assets of the Trust.
Please refer to Section 7 for information
on Director indemnification and
insurance cover.
Cbus
Manual
Trustee Director
Duties
Business Judgment Rule Section
180 (2)
corporation who makes a business
judgment (means any decision to take,
or not take, action in respect of a matter
relevant to the business operations
of the corporation) is taken to meet
the requirements of s.180 (1) and their
equivalent duties at common law and
in equity, in respect of the judgment
if they:
■■
Make the judgment in good faith for
a proper purpose;
■■
Do not have a material personal
interest in the subject matter of the
judgment;
■■
Inform themselves about the
subject matter of the judgment to
the extent they reasonably believe
to be appropriate; and
■■
Rationally believe that the judgment
is in the best interests of the
corporation.
Directors of wholly-owned
subsidiary companies
A Director of a corporation that is a
wholly owned subsidiary of a body
corporate is taken to act in good faith in
the best interests of the subsidiary if:
■■
The constitution of the subsidiary
expressly authorises the Director
to act in the best interests of the
holding company;
■■
The Director acts in good faith in
the best interests of the holding
company;
■■
The subsidiary is not insolvent at the
time the Director acts and does not
become insolvent because of the
Director’s act. s.187
The Constitution of all wholly owned
subsidiary companies should reflect
this provision. The Constitution of Cbus
Property P/L expressly allows Directors
to act in the best interest of United
Super P/L.
The Director’s or officer’s belief that the
judgment is in the best interests of the
corporation is a rational one unless the
belief is one that no reasonable person
in their position would hold.
Section 189 provides that a Director
may rely upon information provided by
competent employees or expert advice
given by a person competent to give
that advice if the Director’s reliance
is made:
■■
In good faith; and
■■
After making an independent
assessment of the information
or advice in the context of the
Director’s knowledge of the
company and the complexity of
the structure and operations of
the company.
06
Prudential Standards
Prudential Standards are legislative instruments which are formulated
and enforced by APRA. They are principles-based and are designed
to provide clarity and certainty by providing additional detail on the
prudential matters set out in the SIS Act.
There are twelve prudential standards
applying to superannuation. Six of the
standards are known as behavioural
standards and apply across all
APRA-regulated entities (banks, life
insurers and general insurers). These
standards cover risks associated
with the behaviour of the Board and
Management. They are:
■■
SPS 510 Governance
■■
SPS 520 Fit and proper
■■
SPS 231 Outsourcing
■■
SPS 232 Business continuity
management
■■
SPS 220 Risk management
■■
SPS 310 Audit and related matters.
The remaining six prudential standards
are known as technical standards
and cover risks specific to the
superannuation industry. They are:
■■
SPS 530 Investment governance
■■
SPS 521 Conflicts of interest
■■
SPS 114 Operational risk financial
requirement
■■
SPS 250 Insurance in
superannuation
■■
SPS 410 MySuper transition
■■
SPS 160 Defined benefit matters
(not applicable to Cbus).
Each of the twelve prudential standards
is supported by a prudential practice
guide. While not enforceable by APRA,
prudential practice guides provide
further guidance on how to meet the
requirements of Prudential Standards
and set out what APRA considers to be
sound practice in particular areas.
SPS 510 Governance
This Prudential Standard sets out
minimum foundations for good
governance of the Trustee. The standard
aims to ensure that the Trustee’s
business operations are managed
soundly and prudently by a competent
Board, which can make reasonable and
impartial business judgments in the best
interests of beneficiaries and which duly
considers the impact of its decisions on
beneficiaries. The ultimate responsibility
for the sound and prudent management
of the Trustee’s business operations
rests with the Board of Directors.
The key requirements of the
Governance Prudential Standard
are that:
■■
■■
■■
The Board must ensure that
Directors and senior management
of the Trustee, collectively, have the
full range of skills needed for the
effective and prudent operation of
the Trustee’s business operations.
The Trustee’s processes for meeting
this requirement are set out in the
Trustee’s Fit and Proper Policy (refer
to section 8).
A majority of Trustee Directors and
all senior management must be
‘ordinarily resident’ in Australia (i.e. –
likely to be in Australia for a majority
of days in any 12 month period).
■■
The Board must have a Board
Renewal Policy which provides
details of how the Board intends
to renew itself to ensure it remains
open to new ideas and independent
thinking, while retaining adequate
expertise. Refer to section 10 for
further details on the Trustee’s
policy with respect to Board renewal.
■■
The Board must have procedures
for assessing, on at least an annual
basis, the Board’s performance
and the performance of individual
Directors (refer to section 10 for
further details of the Trustee’s
performance review procedures).
■■
The Board must have a
Remuneration Committee. The
Prudential Standard sets out a
number of requirements with
respect to the composition,
roles and responsibilities of this
committee which are reflected in the
Remuneration Committee Charter.
■■
The Board must approve a
Remuneration Policy that aligns
remuneration arrangements
(including performancebased remuneration) with risk
management.
■■
The Board must have an Audit
Committee. The Prudential Standard
sets out a number of requirements
with respect to the composition,
roles and responsibilities of this
committee which are reflected in
the Audit and Risk Management
Committee Charter.
■■
The Trustee must have an
independent and adequately
resourced internal audit function.
The Board must provide the auditor
with the opportunity to raise
matters directly with the Board.
Cbus
Manual
Prudential
Standards
SPS 520 Fit and proper
SPS 231 Outsourcing
This Prudential Standard sets out the
minimum requirements for Trustees in
determining the fitness and propriety
of individuals holding positions of
responsibility.
This Prudential Standard requires that
all outsourcing arrangements involving
material business activities entered into
by a Trustee be subject to appropriate
due diligence, approval and ongoing
monitoring.
The aim is to ensure that the Trustee
prudently manages the risks posed to
its business operations by not having
persons in these positions that are not
deemed fit and proper.
The key requirements of this Prudential
Standard are that:
■■
■■
■■
the Trustee must develop and
implement a Fit and Proper Policy
that meets the requirements of the
Prudential Standard (the Trustee’s
Fit and Proper Policy is detailed at
section 8);
the fitness and propriety of a
Responsible Person must be
assessed prior to initial appointment
and then re- assessed annually;
the Trustee must, where it is found
that a Responsible Person is not
fit and proper, take all prudent
steps to ensure that a person is not
appointed to, or does not continue
to hold, a responsible person
position;
■■
additional fit and proper
requirements must be met for
auditors and actuaries; and
■■
APRA must be provided with certain
information regarding responsible
persons and the Trustee’s
assessment of their fitness and
propriety.
All risks arising from outsourcing
material business activities must be
appropriately managed to ensure
that the Trustee is able to meet its
obligations to its beneficiaries. The
material outsourced arrangements of
Cbus include:
Fund administration services;
■■
Master Custody arrangements; and
■■
Investment Managers.
The key requirements of the
Outsourcing Prudential Standard are
that the Trustee must:
■■
Have a Board-approved
Outsourcing Policy relating to
outsourcing of material business
activities and specific requirements
in relation to the outsourcing to
associated entities.
Have processes for assessing
the options for outsourcing a
material business activity including
preparation of a business case,
tender or other selection processes,
due diligence review, contingency
plans and a determination that the
arrangement is in the best interests
of beneficiaries.
■■
Have sufficient monitoring
processes in place to manage the
outsourcing of material business
activities.
■■
Have a legally binding agreement in
place for all outsourcing of material
business activities containing
minimum mandated provisions.
■■
■■
This Prudential Standard requires
the Trustee to implement a wholeof-business approach to business
continuity management. The standard
applies regardless of whether activities
are outsourced or whether functions
are performed outside of Australia.
Business continuity management
increases resilience to business
disruption arising from internal and
external events and may reduce the
impact on the Trustee’s business
operations.
■■
■■
SPS 232 Business continuity
management
Consult with APRA prior to entering
into agreements to outsource
material business activities to
service providers that conduct their
activities outside Australia.
The ultimate responsibility for the
business continuity of the Trustee’s
business operations rests with the
Board of Directors.
The key requirements of the Business
Continuity Management Prudential
Standard are that:
■■
The Trustee must identify, assess
and manage potential business
continuity risks to ensure that
it is able to meet its obligations
to beneficiaries and protect the
financial position of the Trustee, the
Fund or connected entities.
■■
The Board must consider business
continuity risks and controls as
part of its overall risk management
framework and approve a Business
Continuity Management Policy.
■■
The Trustee must develop and
maintain a Business Continuity
Plan that documents procedures
and information which enable
the Trustee to manage business
disruptions.
■■
The Trustee must review and test
the business continuity plan annually
and periodically arrange for its
review by the internal audit function
or an appropriate external expert.
■■
The Trustee must notify APRA in the
event of certain major disruptions.
Notify APRA after entering into
agreements to outsource material
business activities or after
terminating such agreements.
Cbus
Manual
Prudential
Standards
SPS 220 Risk management
requirements for the Trustee to have
systems for identifying, assessing,
managing, mitigating and monitoring
material risks that may affect its ability
to meet its obligations to beneficiaries.
These systems, together with the
structures, policies, processes and
people supporting them, comprise the
Trustee’s risk management framework.
The Board of the Trustee is
ultimately responsible for having a
risk management framework that
enables the Trustee to implement
risk management approaches that
appropriately manage different types of
risk. The risk management framework
must be aligned with the Trustee’s
business plan and cover, at a minimum,
the following risks:
■■
Governance risk;
■■
Investment governance risk;
■■
Liquidity risk;
■■
Operational risk;
■■
Insurance risk;
■■
Strategic and tactical risks; and
■■
Any other risks that could materially
impact the Trustee’s business
operations.
The key requirements of the Risk
Management Prudential Standard are
that:
■■
■■
■■
The Trustee must have a written,
3-year rolling Business Plan that
sets out the high-level strategic
direction of the Fund and review the
plan at least annually.
The Trustee must maintain and
review, at least annually, a Boardapproved Risk Appetite Statement
that articulates the degree of risk
that the Trustee will accept in
pursuit of strategy and defines risk
tolerances for each material risk.
The Trustee must maintain a
Board-approved Risk Management
Strategy that describes the key
elements of the risk management
framework that gives effect to the
Trustee’s strategy for managing risk.
■■
■■
The Trustee must have a designated
risk management function
responsible for assisting the
Board, its committees and senior
management in developing and
maintaining the risk management
framework.
The Trustee must notify APRA
when the Trustee becomes
aware of a significant breach of,
or material deviation from, the
risk management framework, or
discovers that the risk management
framework does not adequately
address a material risk.
■■
The Trustee must, on an annual
basis, provide APRA with a risk
management declaration as part
of the Annual APRA return.
■■
The Trustee must maintain
adequate technical, human and
financial resources at a level that is
adequate for the Trustee’s business
operations.
SPS 530 Investment
governance
This Prudential Standard requires
the Trustee to implement a sound
investment governance framework
and to manage investments in a
manner consistent with the interests
of beneficiaries. The operation of this
Standard supplements and supports
the investment covenants contained in
the SIS Act and detailed in section 5 of
this Policy.
The Board is ultimately responsible
for having an Investment Governance
Framework for the selection,
management and monitoring of
investments.
The Board of the Trustee must:
■■
approve specific and measurable
investment objectives for each
investment option, including return
and risk objectives;
■■
approve an Investment Strategy
for the whole of fund and for each
investment option offered that
reflects the Trustee’s duties to
beneficiaries (see section 2);
■■
monitor and regularly assess
whether the investment objectives
are being met; and
■■
take appropriate and timely action
regarding information contained in
reports to the Board on investment
matters.
SPS 310 Audit and related
matters
This Prudential Standard outlines the
roles and responsibilities of the external
auditor. It also outlines the obligations
the Trustee to make arrangements
to enable an auditor to fulfil his or her
responsibilities.
The key requirements of the Audit
Prudential Standard are that:
■■
The Trustee must make
arrangements to enable an auditor
to undertake his or her role and
responsibilities.
■■
The auditor must audit the financial
statements and annual information
required under reporting standards
made by APRA in relation to the
Fund, review other aspects of the
Fund, and report to the Trustee. The
audit and review must cover the
Trustee’s business operations in
respect of the Fund.
■■
The auditor may also be required
to undertake special purpose
engagements.
■■
The Trustee must submit to APRA all
reports required to be prepared by
the auditor.
Other key requirements of the
Investment Governance Prudential
Standard are that the Trustee must:
■■
develop and implement an effective
due diligence process for the
selection of investments;
■■
determine and approve appropriate
measures to monitor the
performance of investments on an
ongoing basis;
■■
review the investment objectives
and investment strategies on an
ongoing basis; and
■■
maintain a Board-approved
Liquidity Management Plan.
Cbus
Manual
Prudential
Standards
SPS 521 Conflicts of interest
requirements for the identification,
avoidance and management of conflicts
of duty and interest by the Trustee.
These requirements are essential
to ensure that the Trustee and its
Responsible Persons meet legislative
obligations in the SIS Act; namely the
obligation to give priority to the duties
to and interests of beneficiaries, over
the duties to and interests of other
persons.
for having a conflicts management
framework which applies to the entirety
of the Trustee’s business operations.
The key requirements of the Conflicts of
Interest Prudential Standard are that the
Trustee must:
■■
develop, implement and regularly
review a Conflicts Management
Policy that is approved by the Board;
■■
identify all relevant duties and
relevant interests;
■■
develop and maintain registers
of relevant duties and relevant
interests;
■■
ensure that all incoming Responsible
Persons disclose all relevant duties
and relevant interests prior to the
person taking up the appointment.
A ‘Relevant Duty’ means any duty owed
by the Trustee or a Responsible Person
to beneficiaries of the Fund or any
other person. Relevant Duties requiring
disclosure might include (but are not
limited to):
■■
a duty owed to a current employer;
■■
a duty in respect of any directorships
of other companies; or
■■
a duty arising from a consultancy
arrangement, executive position or
any other appointment.
A ‘Relevant Interest’ means any interest,
gift, emolument or benefit, whether
pecuniary or non-pecuniary which is
held by the Trustee or Responsible
Person either directly or indirectly.
Relevant Interests requiring disclosure
might include (but are not limited to):
■■
gifts to a Responsible Person over
$500;
■■
any major shareholdings in public
or private companies (interests in
shares or securities that exceed
10% of shares or securities on
issue);
■■
interests in a related party of the
Trustee;
■■
interests in property or other assets
that may result in a conflict situation;
■■
any financial or non-financial
benefits that are or may be derived
by a Responsible Person from an
entity that provides services to the
Trustee; or
■■
interests of a spouse, child, parent
or sibling of a Responsible Person
that could lead to a conflict situation.
In accordance with the Trustee’s
commitment to openness and
transparency in its management of
the Fund, a summary of the Conflict
Management Policy and Register of
Relevant Duties and Relevant Interests
are disclosed on the Fund’s website.
SPS 114 Operational risk
financial requirement
(‘ORFR’)
This Prudential Standard sets out
the requirements for the Trustee to
maintain adequate financial resources
to address losses arising from
operational risk events.
for ensuring that it holds, and has
unfettered access to, financial
resources in the form of an operational
risk reserve to meet the target amount
of financial resources that the Trustee
determines is necessary to respond to
these losses.
Standard are that the Trustee must:
■■ have an ORFR Strategy that
sets out the Trustee’s approach
to determining, implementing,
managing and maintaining the ORFR
target amount;
■■ have suitable policies and
procedures to manage the financial
resources held to meet the ORFR
target amount;
■■ determine a tolerance limit below
the ORFR target amount that, if
financial resources held to meet
the ORFR target amount were to
breach this limit, would require the
RSE licensee to notify APRA and
implement a replenishment plan;
■■ ensure that the financial resources
held to meet the ORFR target
amount are only used to address an
operational risk event; and
■■ Develop a Board-approved ORFR
Transition Plan which details
how the Trustee will build up the
operational risk reserve. (Note
that the Trustee has 3 years from
1 July 2013 to meet its ORFR target
amount).
Cbus
Manual
Prudential
Standards
SPS 250 Insurance in
superannuation
requirements for the Trustee with
respect to making insured benefits
available to beneficiaries.
for having an insurance management
framework that reflects the risks
associated with making available
insured benefits.
The insurance management framework
must include the Insurance Strategy for
the Fund as required in the SIS Act.
Standard are that a Trustee must also:
■■ ensure that insurance arrangements
adequately address the minimum
requirements set out in Prudential
Standard; and
■■ formulate and give effect to
appropriate selection processes for,
and due diligence of, insurers and
monitor relationships with insurers
on an ongoing basis.
SPS 410 MySuper Transition
minimum processes for Trustees in
relation transferring all default balances
to a MySuper product before 1 July 2017.
The Prudential Standard requires the
Trustee to:
■■
Identify and report to APRA the
number of default balances (i.e.
– those members who have not
exercised choice) and the amount of
those balances; and
■■
Prepare and implement a transition
plan addressing the movement
of default balances to a MySuper
product.
Breach of Prudential
Standards
Prudential Standards fall within the
definition of RSE Licensee law under the
SIS Act. It is therefore an RSE licence
condition that the Trustee must comply
with Prudential Standards.
If a Trustee breaches a Prudential
Standard it will constitute a breach
of the Trustee’s RSE Licence. In such
instances, the Trustee has an obligation
to report the contravention to APRA if
deemed significant.
APRA has the power under the SIS Act
to direct the Trustee to comply with
a Prudential Standard by a specified
time if APRA has reasonable grounds to
believe that the Trustee has breached
the Standard. APRA also has the power
to cancel the Trustee’s RSE licence.
Further, to the extent that a Prudential
Standards supplements and elaborates
on a provision of the SIS Act or
Regulations (including Trustee duties) a
contravention of a Prudential Standard
may also indicate that a Trustee has
breached the relevant provision of the
SIS Act or Regulations which may carry
specific penalties under the Act.
07
Indemnification
and Insurance
This section outlines the various indemnities available to Directors in
their capacity as Directors of the Trustee.
Indemnification of Directors
Section 57(1) of SIS allows for a Director
of the Trustee to be indemnified out
of the assets of the Fund in respect
of a liability incurred while acting as a
Director of the Trustee.
In order to indemnify itself out of the
assets of the Fund, the Trustee must
first exhaust its Operational Risk
Financial Requirement (ORFR) or any
other resources maintained to cover the
risk of litigation against the Trustee.
Note that no such indemnity can be
given against liability for a monetary
penalty under a civil penalty order or a
liability that arises because the Director:
■■
Fails to act honestly in a matter
concerning the entity; or
■■
Intentionally or recklessly fails to
exercise, in relation to a matter
affecting the entity, the degree of
care and diligence that the Director
is required to exercise.
A civil penalty order is where the Court
makes a declaration that a civil penalty
provision under the SIS legislation has
been contravened. The Court declares
that a person has, by a specified act or
omission, contravened such provision.
Examples of civil penalty provisions
include breaches of:
■■
The sole purpose test;
■■
Lending to members of the
superannuation fund;
■■
In-house asset rules; and
■■
Duty to notify APRA of significant
adverse events.
Trust Deed Indemnity
Deed provides that each Director is
indemnified out of the assets of Cbus
against any claim made or liability
incurred as Director of the Trustee.
In accordance with the SIS Act
exceptions, the right of indemnification
under the Trustee Deed does not apply
if a Director:
■■
fails to act honestly in a matter
concerning the Fund; or
■■
intentionally or recklessly fails
to exercise the degree of care
and diligence that the Director is
required to exercise; or
■■
■■
Improper use of information
obtained as a Director of the
Trustee to gain advantage or cause
detriment to the Trustee.
The Corporations Act prohibits the
Trustee from insuring Directors against
these liabilities.
incurs a monetary penalty for a
breach of the SIS Act, Corporations
Act or any other legislation which
regulates the operation of the
Trustee or Fund.
Directors and Officers
Insurance
Access, Indemnity and
Insurance Agreements
The Fund provides Directors with
Access, Indemnity and Insurance
Agreements which provide Directors
with provisional rights and benefits parallel
to those provided by the Corporations
Act, Trust Deed and Articles.
The purpose of these Agreements is
multi-fold, but summarily:
The Trustee has in place a Directors
and Officers Insurance Policy (‘D&O
insurance’) that covers each Director
and Officer for claims made against
them during the Policy period with
respect to their duties to the Trustee.
■■
it protects Directors should the
company fail to take out or continue
to hold requisite D&O insurance
cover in the future;
■■
it provides access to books and
records in excess of what the
Corporations Law provides; and
■■
it confirms the indemnification
of Directors, notwithstanding
any changes to the Company’s
constitution in later years to reduce
current levels of protection.
The policy indemnifies each Director
against:
■■
All liability against which Directors
are indemnified under the Trust
Deed;
■■
Monetary penalties for which a
Director is not indemnified under
the Trust Deed; and
■■
Legal costs incurred by a Director in
respect of legal claims or inquiries
concerning Cbus or anything done
by the Director as a Director of the
Trustee.
The D&O insurance does NOT cover
any liability or expense incurred by a
Director as a result of:
■■
The Director’s own dishonesty;
■■
A wilful breach of a Director’s duty;
■■
Improper use of a Director’s position
to gain advantage or to cause
detriment to the Trustee; and
The arrangements also clarify those
instances where the Trustee by law, is
prohibited from indemnifying and/or
insuring Directors against certain risks.
All executed agreements are held in the
Office of the CEO. All agreements are
identical as between Directors (there
is no variation of rights). No one (1) or
more agreement/s can be modified or
altered without the written consent of
all parties who are party to the original.
It is at Directors’ discretion as to
whether they enter into the Agreement
with the Trustee. In either case, the
Directors’ protections under current
instruments are not impacted.
08
Fit and Proper Policy
The Trustee must ensure that persons acting in responsible person
positions possess the necessary fitness and propriety for these
positions. Equally, the Trustee must ensure that the risk of such
persons not possessing the necessary fitness and propriety is
prudently managed. The ultimate responsibility for ensuring the
fitness and propriety of the Responsible Persons of the Trustee
rests with the Board.
The aim of the fit and proper
requirements is to ensure that
Responsible Persons do not pose
risks to the interests, or reasonable
expectations, of beneficiaries, the
financial position of the Fund or any
other relevant prudential matter.
To this end, this Fit and Proper Policy
aims to ensure that each individual
holding a Responsible Persons position
on behalf of the Trustee meets the
requirements of Prudential Standard
SPS 520.
Prudential Standard SPS 520
generally:
The Trustee must meet the standards
relating to fitness and propriety at all
times, and it is an offence if the Trustee
intentionally or recklessly contravenes
the Standard.
The requirements of the Standard
do not preclude the Trustee from
employing or using in-house or external
service providers to assist in the
performance of the Trustee’s duties and
responsibilities.
Where the Trustee does receive
external advice, it must ensure that it
has sufficient knowledge to assess the
advice of technical experts and to make
informed decisions in the best interest
of beneficiaries based on that advice.
Instead, the key focus of the Standard
is on ensuring that Responsible
Persons have the appropriate skills,
experience and knowledge, and act with
honesty and integrity in their roles as
Responsible Persons.
It should be noted that the Responsible
Persons of the Trustee are required to
comply with this Fit and Proper Policy, in
all aspects of their role.
Fitness:
1.Investments
A Skills Set (Attachment 1) has been
developed by the Trustee, which
outlines the three tiers of knowledge
and skill required by Responsible
Persons across the six core skill or
knowledge areas. A Skills Matrix
(Attachment 2) indicates the numbers
of Responsible Persons required
across the Board and Committees
at each tier, for each of the six core
skills or knowledge areas. The Trustee
has determined that this Skills mix is
required for the Board and Committees
to function appropriately.
2.Property
Propriety:
The fitness limb of the standard
focusses on an individual’s character,
competence and experience. Each
individual Responsible Person is
expected to make a contribution to the
Trustee satisfying the requirements of
fitness at a collective level.
The Trustee has determined a set of
minimum competencies that must be
met by all Responsible Persons across a
set of six core skill or knowledge areas:
3. Operational (including Member/
Employer requirements, strategic,
administration, insurance and
marketing)
4. Audit and Financial
5. Governance and Risk Management
6. Remuneration and People
The propriety limb of the standard must
be met at all times by each Responsible
Person. In determining the “propriety”
of an individual to act as a Responsible
Person, the factors that are considered
are listed in Factors to determine
Propriety (Attachment 3).
The above skill sets have been
determined taking into account the
following factors:
Definition of a Responsible
Person
■■
The business currently being
conducted by the Trustee;
Under Prudential Standard SPS 520 a
responsible person of a Trustee is:
■■
The strategy and future focus of
the Trustee;
■■
The size and complexity of the funds
managed; and
■■
The skills required to adequately
manage the external risk
environment.
■■
a Director of the Trustee;
■■
a Secretary of the Trustee;
■■
a Senior Manager of the Trustee;
■■
a Fund Auditor who is appointed to
conduct any audit of the Trustee or
any connected entity; and
■■
a person who performs activities
for a connected entity of the
Trustee where those activities
could materially affect the Trustee’s
business operations, or its financial
standing, either directly or indirectly.
Cbus
Manual
Fit and Proper
Policy
Based on this definition, Cbus has
determined that its ‘Responsible
Persons’ include:
■■
all Directors of the Trustee;
■■
Company Secretary/s of the
Trustee;
■■
all Executive Managers of the
Trustee;
■■
and the external Fund Auditor.
APRA can also determine that a person
is a Responsible Person if it is satisfied
that the person plays a significant role
in the management or control of the
Trustee, or that the person’s activities
may have a material impact upon the
business of the Trustee. Inversely, APRA
may also determine, that a person is not
a Responsible Person if it is satisfied that
the person does not play a significant
role in the management or control of the
Trustee, or that the person’s activities
does not have a material impact upon
the business of the Trustee.
Under Prudential Standard SPS520,
the Fund Auditor is now classified as a
Responsible Person of the Trustee. As a
result, the Fund Auditor is subject to the
same checks as all Responsible Persons
of the Trustee as well as additional
criteria which apply specifically to
Auditors.
Criteria to determine if a
Responsible person is fit
and proper
Generally:
It is a requirement of Prudential
Standard SPS520 that the Trustee
clearly defines and documents the
competencies required for each
Responsible Person position. These
competencies are reflected in the
Trustee Responsible Person Skill Sets
at Attachment 1.
For the purposes of the SIS Act and for
the purposes of determining whether
a person is fit and proper to hold a
responsible person position, the criteria
are whether:
a) it would be prudent for a Trustee
to conclude that the person
possesses the competence,
character, diligence, experience,
honesty, integrity and judgment to
perform properly the duties of the
responsible person position;
b) it would be prudent for a Trustee
to conclude that the person
possesses the education or
technical qualifications, knowledge
and skills relevant to the duties and
responsibilities of an RSE licensee;
Disqualified Persons:
Disqualifications may prevent an
individual from holding a Responsible
Person role. The Trustee must take
reasonable steps to satisfy itself
that the Responsible Person is not
a disqualified person within the
meaning of s120 of the SIS Act. As
such, the Trustee must ensure that
the Responsible Person has not been
convicted of any offence of dishonesty
in any jurisdiction, within Australia or
overseas. A person may be disqualified
as a result of any of the following
situations:
■■
c) the person is not disqualified
under the SIS Act from holding the
position; and
At any time the individual was
convicted of an offence in respect
of dishonest conduct in any
jurisdiction; or
■■
A civil penalty order was made in
relation to the person; or
d) the person either:
■■
The person is insolvent under
administration; or
■■
Disqualified by the Federal Court
under s126H(5) of the SIS Act or by
the Commissioner of Taxation under
section 126A.
(i) has no conflict in performing the
duties of the responsible person
position; or
(ii) if the person has a conflict, it
would be prudent for a Trustee
to conclude that the conflict will
not create a material risk that
the person will fail to perform
properly the duties of the
position.
Please see Responsible Persons – Skill
Sets (Attachment 1) and Responsible
Persons – Skills Matrices (Attachment 2)
for further guidance on what is
considered with regard to this element
of the Standard.
Please see Factors to determine
Propriety (Attachment 3) for further
guidance on what is considered with
regard to this element of the Standard.
Prior to being appointed, an individual
is required to successfully pass an
Australian Federal Police Check (Partial
Exclusion). This must be ‘current’ –
that is to say, not more than 28 days
old. ‘Partial Exclusion’ means that an
applicant is not protected by the Spent
Convictions legislation for offences
relating to dishonest conduct. Any
convictions of the individual in question
will result in them being deemed a
Disqualified person.
Where a Director has resided overseas
for more than 12 months after the age
of 18, consideration will also be given
as to whether to obtain criminal record
checks from the country or countries
of residence, similar to that required by
the Department of Immigration for a
visa application.
Persons banned from acting as
a company Director under the
Corporations Act 2001 or similar
overseas legislation are ineligible
for appointment as a Director of a
Trustee that is a body corporate.
Cbus
Manual
Fit and Proper
Policy
Additional criteria applying to Fund
auditors:
There are additional criteria which the
Fund Auditor must now satisfy under
Prudential Standard SPS520, in order to
be classed as fit and proper. These are
that the Fund Auditor:
■■
■■
■■
■■
■■
be registered as an auditor under
the Corporations Act or is the
Auditor- General (or a delegate
of the Auditor- General) of the
Commonwealth, a State or Territory;
is not the Chief Executive Officer
(CEO) or a Director of the Trustee,
or of a related body corporate or a
connected entity;
has a minimum of five years’
relevant experience in the audit
of the business operations of the
superannuation trustees generally;
has experience relating to the
business operations of the Trustee
that is sufficiently relevant and
recent to provide reasonable
assurance that the person is familiar
with current issues in the audit
of the business operations of the
Trustee;
Process for assessment of
fitness and propriety
The Trustee must complete a Fit
and Proper assessment for each
Responsible Person prior to the person
becoming a holder of the position.
The following paragraphs detail the
process under which the assessments
of fitness and propriety will be
performed.
1. Responsibility for processes:
Responsibility for ensuring these
processes are performed to assess
the fitness and propriety of a proposed
Responsible Person rests with the
Executive Manager, Governance & Risk.
2. Information and Declaration/s
to be collected
(ii) an employee or Director of a
body corporate, statutory body,
partnership, trust, or commercial
or professional enterprise of any
kind of which the actuary is an
employee or Director; or
(iii) a partner of the actuary;
■■
is a member of a recognised
professional body; and
■■
is ordinarily resident in Australia.
In addition, the Fund Auditor must not
be an employee of the Trustee.
There are exceptions to the above
criteria where, for example, the Trustee
considers that there are exceptional
circumstances. APRA must be notified if
this is the case.
■■
Declaration that no disqualifications
exist that would prevent the
Responsible Person from holding the
position; and
■■
Eligibility Declarations;
Skills evaluation
A self-evaluation of their skills, against
the criteria set out under the Skills Sets
(Attachment 1) and Skills Matrices
(Attachment 2).
3. Checks and searches to be
performed:
The following checks will be conducted
in order to assess the fitness and
propriety of Responsible Persons:
■■
Police check (including consideration
of additional checks in foreign
jurisdictions if the person has lived
overseas for more than 12 months
after the age of 18);
■■
Bankruptcy check; and
■■
Search of the ASIC ‘Banned and
Disqualified Person’s Register’ and
the APRA ‘Disqualification Register’.
Complete an Application for
Appointment, which includes:
■■
■■
is not:
(i) an actuary of the Trustee;
Declarations
■■
■■
Details (and certificates,
where appropriate) of relevant
qualifications, education and skills;
Disclosure of all relevant duties and
relevant interests in accordance with
the Trustee’s Conflicts Management
Policy;
Consent form enabling the Trustee
to disclose any relevant information
to APRA;
Written reference from a referee,
over the age of 30, who has known
the individual for a minimum of
three consecutive years. This must
include:
– A statement attesting to
the person’s good name and
character;
– A statement about a person’s
business and professional
practices; and
4. Matters that will be considered
before determining if a person is fit
and proper:
In order to determine if a person is fit
and proper, consideration will be given
as to whether the individual has:
■■
Provided all required information;
■■
Satisfied all of the required checks;
■■
Satisfactorily completed all the
declaration requirements; and
■■
Is competent to perform the
duties of the responsible person,
as demonstrated in the Skills
evaluation.
– A statement attesting to the
person’s reputation and integrity
in the conduct of business
activities.
Cbus
Manual
Fit and Proper
Policy
5. Review of documentation and
finalising appointments
The Executive Manager, Governance
& Risk will review all appointment
documentation and checks undertaken
and will make a recommendation to
the Fund Chair in the case of a Director/
Alternate Director whether the
individual should be recommended
for appointment to the Board.
In the case of an executive manager a
recommendation on appointment will
be made to the CEO.
In the event where the Responsible
Person has satisfied all of these matters
WITH THE EXCEPTION of achieving
the required skills tier for the role, the
individual has 12 months from the
date of appointment to satisfy this
requirement. The Skills evaluation will
determine the individual’s training
programme for the following 12 months.
Not fit and proper
The fit and proper criteria in SPS 520
require the Trustee to assess whether
responsible persons meet certain
requirements. If insufficient information
is available to enable the RSE licensee
to prudently conclude that those
requirements are met, particularly as
a result of lack of cooperation by the
person, the criteria would normally be
regarded as not met.
Where a person is found to be not fit
and proper due to a lack of character,
diligence, honesty, integrity or
judgment, that person will normally
not be suitable for any responsible
person position. In particular, if a
responsible person’s conduct is
found to be misleading or deceptive
in their interactions with APRA and its
supervision processes, APRA would not
consider the person to be fit and proper.
In the event that a sponsoring
organisation nominates an individual
as a Director or alternate Director and
there is evidence that the individual may
not meet the Fit and Proper Standard
the Fund Chair and CEO will meet with
the sponsoring organisation to discuss
the issue and determine whether:
■■ Further evidence and investigation
is required; or
■■
The sponsoring organisation will
nominate another individual.
Where a Fit and Proper assessment is
conducted and an individual is found
not to be Fit and Proper, they will not be
appointed to the Responsible Person
role in question.
Circulation of Fit and Proper
Policy:
Any proposed Responsible Person is
given a copy of the Fund Governance
Policy.
In addition, following amendments to
the Fit and Proper Policy, all Responsible
Persons are to be given a copy of the
revised Policy.
Responsible Persons are expected
to familiarise themselves with the
contents of the Fit and Proper policy,
and ensure that they comply with
the revised obligations imposed by
the revised Fit and Proper Policy. The
Trustee must take all reasonable steps
to ensure that each Responsible Person
is aware of, and understands, the
provisions of this Fit and Proper policy.
Taking into account the Trustee’s
skills matrix, and to ensure consistent
standards across the operations of the
Fund, the Trustee has set its Minimum
Training Standard for all Responsible
Persons, in accordance with ASIC
Regulatory Guide 146 (‘RG 146’).
New Responsible Persons must undergo
appropriate training to reach the
minimum training standards set, if they
do not already meet them, within 12
months of appointment.
Minimum Training
Requirements:
All Responsible Persons are required
to meet a 30 hour minimum training
requirement each year which can be
achieved as follows:
Activity
Time allocation
Reading
5 hours annually
Attendance at Board/
Committee meetings
30 minutes
per meeting
Other training
Actual time spent
It is each Responsible Persons’
responsibility to ensure they meet their
ongoing professional development
requirements.
Individual Registers for Directors are
maintained.
The CEO and Executive Management
are required to maintain a record of any
completed training, and upload this onto
the HR system (Self Service).
Induction and Training
A six-monthly review is conducted to
ensure that all Responsible Persons are
maintaining their training hours.
An Induction program is designed for
each new Responsible Person taking
into account their particular role, Board
and Committee membership, and the
outcome of their skills assessment.
Should a Responsible Person not meet
the 30 hours ongoing minimum training
requirement action may be taken in line
with the section ‘Process to Deal with
Persons who are not Fit & Proper.’
A Responsible Person must be able to
quickly acquire sufficient knowledge
regarding the duties and responsibilities
of a Trustee in order that they are
capable of making informed decisions
having regard to the advice of technical
experts.
Cbus
Manual
Fit and Proper
Policy
Maintaining Status as Fit
and Proper
Information gathering and
disclosure
Ongoing Review of Responsible Persons:
Trustee’s duty to obtain information:
At each Board and Committee meeting
Responsible Persons are asked to advise
if they know of any matter which may
bring into question their compliance
with the ‘proper’ element of the APRA
fit and proper standard.
When a Fit and Proper assessment
is conducted, either at the initial
appointment of a Responsible Person or
at the annual review, the Trustee has an
obligation to take all reasonable steps to
obtain information – including sensitive
information - which it believes may be
relevant to the assessment.
Annual review:
It is a requirement of the Prudential
Standard SPS520 that the Trustee
perform annual fit and proper
assessments for each Responsible
Person.
The annual fit and proper assessment
includes for each Responsible Person a:
■■
■■
Disqualification check on the
ASIC Banned and Disqualified
Person’s Register and the APRA
Disqualification Register; and
Completion of an eligibility
declaration that no issues exist
that would prevent the Responsible
Person from holding the position.
Triennial review:
Every three years from the date of
appointment the following additional
checks for each Responsible Person will
be conducted:
■■
Police check; and
■■
Bankruptcy check.
Similarly, where a Responsible Person
has been assessed as fit and proper
previously and the Trustee obtains
information that may result in the
person not being assessed as fit and
proper, the Trustee has an obligation
to take all reasonable steps to obtain
information – including sensitive
information - which it believes may be
relevant to the assessment.
Where there is concern as to whether
an assessment of Fitness and Propriety
is correct, a full assessment must be
conducted.
Responsible Person’s duty to disclose
information:
In light of the preceding paragraphs
on the Trustee’s duty to obtain
information, the Responsible Person
them self has a duty to disclose any
information that may be relevant to the
fit and proper assessment. This can
either be disclosed to the Trustee or to
APRA directly.
The Responsible Persons must note
that the Trustee is obligated, under the
Prudential Standard, to disclose any
such information to APRA, as required.
As part of the application process,
Responsible Persons will be asked to
complete a Consent form enabling
the Trustee to disclose any relevant
information to APRA.
Information retention:
The Trustee will retain and maintain
sufficient documentation for each
Responsible Person, both current and
former, for a period of at least ten years.
Reporting Sensitive
blowing) with regard to the
Fit and Proper requirements:
The Trustee has in place a Reporting
Sensitive Information (Whistle
blowing) Policy, which is outlined at
Section 12.
In accordance with this policy, the
Trustee provides for the reporting of
sensitive information (whistleblowing) if
a person has information that:
■■ a Responsible Person does not meet
the Trustee’s Fit and Proper criteria;
or
■■ the Trustee has not complied with
the requirements of the Fit and
Proper Prudential Standard.
In such circumstances, the Trustee
consents to the person providing that
information to:
■■ The External Whistleblower Officer
(via the Faircall hotline);
■■ Fund Chair; CEO;
■■ Executive Manager, Governance and
Risk; or
■■ APRA.
The Trustee also consents to any person
who held a Responsible Person position
disclosing information or providing
documents to APRA relating to their
reasons for resignation, retirement
or removal.
The Trustee will not constrain, impede,
restrict or discourage, whether by
confidentiality clauses, policies or other
means, any person from disclosing
information or providing documents to
APRA about the above listed matters.
The Trustee will take all reasonable
steps to ensure that any person
making disclosures in good faith will
not be subject to, or threatened with a
detriment because of any notification
in purported compliance with the
requirements of the Trustee’s Fit and
Proper Policy.
The Trustee will ensure that all
provisions of the Reporting Sensitive
Information (Whistle blowing) Policy
are adequately explained to Directors
and employees of the Trustee who are
likely to have information relevant to fit
and proper assessments.
Cbus
Manual
Fit and Proper
Policy
Where a Responsible Person
is not fit and proper
This section applies where Responsible
Persons have previously been assessed
under the Fit and Proper, but are
subsequently found not to be Fit and
Proper in a later assessment. Generally,
a person will not continue to hold a
Responsible Person role if they do
not meet the Trustee’s Fit & Proper
standard.
Where a responsible person has
been assessed as fit and proper, but
the Trustee subsequently becomes
aware of information that may result
in the person being assessed as not fit
and proper, the Trustee must take all
reasonable steps, including collecting
sensitive information as defined in the
Privacy Act 1988 if relevant, to ensure
that it can prudently conclude that no
material fitness and propriety concern
exists. Where a concern exists, a full
fit and proper assessment must be
conducted.
Should the Trustee have reason to
believe that a Responsible Person may
no longer meet the Trustee’s Fit and
Proper standard, the Trustee will:
■■ Ensure adequate collection and
verification of evidence;
■■
■■
■■
■■
Ensure adequate notice to the
person of the allegations;
Provide an opportunity for the
person involved to explain their
actions or respond to allegations;
Institute a fair decision making
process; and
Ensure proper documentation
of the matter.
& Risk must establish how a person is
not complying with the Fit and Proper
standard or the disqualified person rules
and prepare a written report to the Fund
Chair and CEO detailing the potential
non-compliance. The report should
also include how that information
came to the Trustee’s attention unless
there are specific circumstances where
confidentiality must be maintained.
Actions:
Action to be taken by the Trustee Board:
The Fund Chair and the CEO will review
the report and determine if there is a
potential breach of the standard.
In the event of a Responsible Person
being declared a disqualified person,
the Responsible Person will be removed
from office immediately. APRA will be
notified of the action and the reason
for it.
If it is determined that there is a
potential breach they will notify the
Responsible Person concerned and
request them to provide a formal
response within five days.
Upon receipt of the formal response,
it will be determined if further
investigation is required.
If the Responsible Person agrees they
have breached the standard the Chair
and the CEO will:
■■ Report the breach to the sponsoring
organisation in the case of a
Director, and
■■
Report the breach to the Board for
its consideration.
If the Responsible Person denies
breaching the standard but the
Chair and CEO believe reasonable
grounds none- the-less exist, further
investigation will be undertaken to
establish the facts.
In the event that the Chair and the CEO
believe that a breach of the standard has
taken place the Board and Sponsoring
Organisation will be notified in writing,
as follows:
■■
The exact nature and timing of the
alleged breach;
■■
The evidence collected which
establishes that a breach has
occurred; and
■■
The action/s which may be deemed
appropriate should the Board /
sponsoring organisation decides a
breach has occurred.
Legal advice:
The Trustee Board will seek legal advice,
if considered necessary, before taking
any remedial action.
otherwise being in breach of the
propriety standard the seriousness
of the breach will be assessed but in
normal circumstances it is expected
that the Responsible Person will be
removed from office. Whatever action
is taken by the Board and/ or the
sponsoring organisation APRA will be
notified of the decision and the reasons
for it.
being in breach of the fitness standard,
the seriousness of the breach will be
assessed and appropriate remedial
action implemented. In the event that
an appropriate remedial plan is not
possible or rejected by the Responsible
Person, the Responsible Person will
be removed from office. APRA will be
for it.
being required to undertake a remedial
plan, the remedial plan will:
■■ Be provided in writing.
■■
Clearly identify the breach of the
standard, the action needed to
remedy the breach, the time frame
within which the breach needs to be
remedied and the measure/s which
will clearly establish that the plan has
been achieved.
■■
Copied to the sponsoring
organisation in the case of a
Director.
■■
Be monitored by the Chair and CEO
to ensure satisfactory completion.
Cbus
Manual
Fit and Proper
Policy
Where the remedial plan is successfully
completed the Chair and the CEO will
advise the Board and, in the case of a
Director, the sponsoring organisation.
In the event of a remedial plan not being
successfully completed the failure will
be reported to the Board and, in the
case of a Director, to the sponsoring
organisation, with a recommendation
that the Responsible Person be
removed from office. APRA will be
for it.
Informing APRA
The Trustee must inform APRA of
the following information for each
Responsible Person:
■■
The title of the Responsible Person
position;
■■
The name of the individual holding
the Responsible Person position;
■■
The date of birth of the individual
holding the Responsible Person
position;
■■
The position and main
responsibilities of the individual
holding the Responsible Person
position; and
■■
A statement of whether the
Responsible Person has been
assessed under the Fit and
Proper policy.
The Trustee must also ensure that all
information gathered for the purposes
of the fit and proper assessments
remain correct, and that any changes
to the above information are notified to
APRA within 14 days of the changes or
new appointment.
Similarly, the Trustee must notify APRA
within 14 days if it assesses that a
Responsible Person is not fit and proper.
If the Responsible Person will continue
to hold the position, the notification
must contain the reason for this, and the
action that is being taken to ensure that
the Responsible Person subsequently
meets the fit and proper requirement.
The Trustee must take all reasonable
steps to obtain any information
required of it by APRA, and provide that
information to APRA, to assist APRA in
assessing the fitness and propriety of an
individual.
Interaction with other Laws
As a law of the Commonwealth,
Prudential Standard SPS 520 may
override inconsistent State and
Territory laws, if those laws are
incapable of operating concurrently
with the Standard. For example, it may
be necessary to read down a State law
relating to employment where there is
apparent inconsistency with SPS 520,
but where the position is unclear legal
advice will be obtained.
Accordingly, the Fit and Proper Policy
of the Trustee needs to meet the
requirements of, and be implemented
in a way that complies with, SPS 520
in all respects, even if it would breach
a contract or apparently conflict with
another law (other than a law of the
Commonwealth).
09
Board and
Committee Composition
The Trustee has an equal representative board where Directors are
nominated by member and employer associations.
Construction Forrest Mining
Energy Union (CFMEU)
Communication Electronics Plumbing
Union (CEPU)
Australian Manufacturing
Workers Union (AMWU)
No of Positions= 3
No of Positions = 1
No of Positions = 1
®
Australian Workers
Union (AWU)
Australian Council of
Trade Unions (ACTU)
Master Builders
Association
No of Positions= 1
No of Positions = 1 or 2
No of Positions = 7
The Directors are nominated by its
sponsoring organisations:
The Chair is nominated by the ACTU.
There is one independent Director who
is appointed by the Board.
Management:
Management are appointed by the CEO.
The CEO is appointed by the Board.
Gender Diversity:
The Trustee is conscious of increasing
its proportion of female Directors;
and the sponsoring organisations (as
outlined above) are asked to take this
into consideration when considering
replacements to the Board. The Fund as
part of its transparency program reports
on the proportion of women on the
Board, in senior management positions
and employed throughout the Fund.
Appointment Procedures for
Responsible Persons:
When a vacancy occurs on the Board,
the Trustee will write to the sponsoring
organisation to outline its requirements
in relation to fitness and propriety. A
copy of the Fund Governance Policy is
also sent out to the nominee Director.
The job description for the CEO or
management position outlines the
Trustee’s requirements in relation to
fitness and propriety.
Independent Director:
A person appointed to the Board as an
independent Director must also meet
the following criteria at the time of
appointment and at all times whilst on
the Board:
■■ Not be an employee of a Sponsoring
Organisation nor an employee
of an associate of a Sponsoring
Organisation; and
■■ Not, in any capacity, be a
representative of a Sponsoring
Organisation representing the
interests of one or more members
or employer-sponsors of the Fund.
Committee Composition
The Board determines the composition
of its Committees and must ensure that
collectively the Committees have the
skills and experience necessary to carry
out its delegated functions.
There are four committees of the Board
as follows:
■■ Investment;
■■ Audit & Risk Management;
■■ Member Services and Marketing;
and
■■ Remuneration.
Each Committee has a charter approved
by the Board outlining its role and
responsibilities.
Committee Review:
A review of the composition of the
Board Committees will occur:
■■ At least annually at the bi-annual
Meeting of the Chairs, or
■■ If prompted by the announcement
of a Director’s retirement from
either the Board or a Committee
(or both).
The review would include an
assessment of:
■■ The residual Committee’s current
experience, skills and diversity mix
(sans the departing member);
■■ The overall performance of
the Committee, including the
commitment of its current members;
■■ The skills, experience and
competencies required by the
Committee to fulfil its role and
responsibilities into the future;
■■ The mix of member, employer
and independent Directors on the
Committee; and
■■ The interests of stakeholders
(internal and external) including
though not limited to, the sponsor
organisations.
Recommendations on any changes
to Committee compositions are then
subsequently made in the Chair’s report
to Board.
10
Board Renewal
and Review Policy
These principles are designed to ensure the Board renews itself and
remains open to independent thinking whilst retaining adequate
experience and expertise.
Tenure
The Trustee places importance on
the continuity of Trustee and Fund
knowledge and the improved Board
dynamics that result from a having an
average Board tenure in excess of
5 years.
■■
■■
The Trustee targets a measure
of collective Board experience
expressed as a range of average
tenure for the Board. This range
of average tenure is a minimum of
5 years and a maximum of 9 years.
Independent Directors are generally
limited to a period of service of nine
(9) years.
Service periods for Directors are
calculated on a cumulative basis i.e.
there being no break of service of
greater than three (3) consecutive
months during this time.
The Trustee applies an average tenure
on a collective basis to mitigate the
risk of departure of Directors who are
making significant contributions and
whose departure would be a significant
loss to the Trustee. Provided Directors
continue to be valued contributors to
the deliberations of the Board and its
Committees, maintain compliance
with the Trustee’s governance policies
and are acting in the best interests of
beneficiaries, their length of service
should not be the sole determinant of
their suitability to serve on the Board.
Circumstances where the Board may
step outside the terms of its average
tenure range:
■■ Where a particular long-serving
Director is the current CEO of, or
holds a senior leadership position
within, one of the Fund’s sponsoring
organisations;
■■
Where a particular skill or experience
of a Director would be required
for e.g. during a Fund merger or
significant new business activity;
■■
Where an appropriate replacement
has not yet been found; and
■■
To ensure there is an appropriate
stagger of tenure periods.
In all instances a Director’s ability to
continue acting in the best interest of
beneficiaries will be paramount.
and Risk will monitor the average tenure
of the Board and advise the Fund Chair
when the average tenure of the Board is
approaching the maximum limit.
In the event of the Board stepping
outside the terms of its collective
average tenure, the circumstances will
be appropriately documented.
Performance Reviews
Annual Review Processes
The Board, it’s Committees and
Directors annually undertake an internal
review of their performance against
their objectives as outlined in Section 2.
The review processes include:
■■
A review of the Board and
Committee Charters;
■■
An internal survey completed
by all Directors on the Board and
Committees’ performance and
effectiveness
■■
Review of the skills mix and
composition of the Board and its
Committees;
■■
Programs for inducting Directors
and developing their skills and
involvement; and
■■
Whether Board and Committee
meetings are efficient, including the
scheduling and timing of meetings,
division of time between its various
responsibilities, minutes, quality of
papers and agendas etc
Meeting of the Chairs
The Fund Chair and Committee Chairs
meet at least twice during the year to
review and discuss how the Committees
are performing, their composition and
any other topical issues. The Chairs
also use these meetings to consider
the future skills and experience
requirements of the Committees,
and whether gaps in these elements
either currently exist, or might exist in
the future without action being taken.
Succession planning of key Committee
roles e.g. Chairs and the independent
Director, are also discussed.
Cbus
Manual
Board Renewal and
Review Policy
Timing
Reappointment of Directors:
The annual review of the Board’s
and Committees’ performances is
completed by the end of each calendar
year and the results of each Committee’s
review and the Board is reported at the
December Board meeting.
The continuation of Directors (including
any Alternate Directors who are
permanent members of Committees),
is considered during a Director’s
individual three (3) yearly review.
Recommendations for action arising
from the Board’s and Committee’s
Performance Reviews, are documented
in the Board’s and Committees minutes
and action item registers.
Directors – annual reviews
Annual Director reviews are included as
part of the annual Board and Committee
review process (as outlined above).
Triennial Reviews
The Board undertakes an external,
independent Board and Committee
performance assessment every three
(3) years. Issues reviewed include:
■■ Board and Committee processes;
■■ Board and Committee cohesion
and decision making; Division of
responsibility – governance and
management;
■■ Setting of strategic direction and
reporting;
■■ Governance policies;
■■ Committee practices, delegations,
processes, decisions and
performance management;
■■ Chair practices; and
■■ Stakeholder engagement.
■■
Commitment to the industry
generally and as a Trustee;
■■
Whether their sponsoring
organisation continues to support
their tenure;
■■
Whether their other commitments
allow sufficient capacity and
opportunity to apply the appropriate
degree of care, skill and diligence to
the role as required; and
■■
Whether their appointment remains
appropriate and tenable, given all
other operational, environmental
and governance elements of
the Board and its sponsoring
organisations.
The Fund Chair or sponsoring
organisation may also initiate an
individual Director review at any time.
The Review process includes discussion
between the Fund Chair, Committee
Chair/s CEO and the respective
Director as well as with the Sponsoring
Organisation.
The exception is the Independent
Director where there is no Sponsoring
Organisation.
The reviews consider:
■■
Whether the Director demonstrates
the required degree and depth of
expertise to continue supporting
their appointment to the Board and
respective Committees, taking into
account their length of tenure;
■■
Whether their continued tenure is
deemed to be in the best interest of
members and beneficiaries;
■■
How well Directors have met the
individual Director objectives over
the period;
■■
Contribution to Board and
Committee deliberations and the
overall direction of the Fund;
■■
Review of training undertaken and
wider participation in activities of
the Fund for e.g. working parties,
nominee Directorships etc;
■■
The future commitment of the
Director to the Fund;
■■
Commitment to ongoing training
and development;
The independent review also includes a
review of the Fund Chair.
and Risk is responsible for ensuring that
the Fund Chair undertakes the reviews
as and when they fall due, according to
the Director’s appointment anniversary.
The staggering of appointments and
retirements would be carefully planned
so as to ensure a smooth continuation
of skills and capabilities on the Board
and Committees at all times.
11
Meetings
This section sets out the Trustee’s established processes and
protocols with respect to the conduct of meetings of the Board and
its Committees.
Annual General Meetings
Attendance at meetings
The Annual General Meeting of the
Company is held in October each year.
It is the shareholders of the Fund who
attend the AGM or appoint proxies to
attend in their place.
Given the significance of the fiduciary
duty concerned, and the responsibility
of overseeing the retirement outcomes
of its members, Directors need to
give consideration to their external
workloads and commitments to ensure
they have the requisite time to commit
to being a director of the Fund.
Board Meetings
Board papers are distributed to
Directors one week before the meeting.
Documents tabled on the day are to be
kept to a minimum. If there is an issue
that a Director wishes to have listed
on the agenda they should contact the
Chair or CEO.
Directors joining a meeting by
telephone or other electronic means,
who have not been previously received a
tabled paper which contains an approval
request, will not vote on that paper at
the meeting.
Committee Meetings
The roles and function of the Board
Committees are set out in the
Committee Charters. The Trustee
expects all directors to participate on
Committees. A rotation of members
and Chairs on Committees is desirable
to allow the Board as a whole to broaden
its knowledge and understanding.
Directors (including Alternate Directors
who are members of Committees),
are expected to attend all meetings
of the Board and their appointed
Committees in order to properly assist
and contribute to the governance
of the Fund.
Attendance in person is preferred, with
attendance by telephone to take place
by exception, and always with the prior
permission of the Chair.
Directors are expected to remain in
attendance for the entire meeting, with
early departures to be pre-approved
with the Chair concerned.
Given the importance of attendance,
the Fund Chair in respect of Board
meetings and the Committee Chairs
for Committee meetings will review
the absences of Board or Committee
members in the following instances:
■■ Where the Director is absent for two
(2) consecutive meetings without
the prior permission of the Fund
Chair for Board meetings or the
Committee Chair for Committee
meetings;
■■
Note that under the Articles of
Association, the office of Director
becomes vacant if a Director is absent
without the consent of the Directors
from meetings of the Directors (i.e.
Board meetings) held during a period of
three consecutive months. Directors
can request the consent of Directors via
the Proxy Voting/Leave consent form.
The review will include direct dialogue
with the Board or Committee member
concerned in the first instance, with
the outcome of that conversation in
the case of a Committee member to be
reported to the Fund Chair.
Should a Director’s ongoing absences
reflect an inadequate commitment to
the Fund, the Director concerned may
be requested to either rotate off the
Board or Committee, or give cause as to
why their appointment should continue.
The Fund Chair will deliberate an
outcome with the Committee Chair and
potentially the sponsoring organisation
(if applicable), having regard to what is in
the best interests of beneficiaries.
Outside of behavioural instances,
Directors’ attendance records are
reviewed annually, as part of the
Individual Director reviews. Individual
Director attendance is also publicly
disclosed on the Fund’s website.
Attendance is taken at all Board and
Committee meetings (including where
Directors join by telephone) and
Director fees are based on attendance.
Where a Director is absent for three
(3) Board or Committee meetings in
total across the financial year with
or without prior permission of the
respective Chair.
Cbus
Manual
Meetings
Conduct of Meetings
The Chair controls the running of the
meeting and it is his or her job to ensure
that the Board deals with all agenda
items. Open discussion and questions
are encouraged, however as a matter
of formality and to ensure that all
items of the agenda can be discussed,
permission should be sought from the
Chair to speak. It is also for the Chair
to decide if non-Directors should
remain in the room for discussion
on sensitive issues.
■■
Any Director wishing to appoint
another Director must first contact
that Director and establish that
the Director will both be present at
the meeting involved and able to
exercise the proxy vote;
■■
In the event that the Director
contacted is not attending or is
unable/unwilling to accept the
proxy it is the responsibility of the
contacting Director to seek the help
of another Director;
Proxies
Directors who are unable to attend a
Board or Committee meeting or attend
the whole of a Board or Committee
meeting may appoint another Director
as their proxy to exercise their vote.
Note: Proxy votes are not allowed
at meetings of the Audit & Risk
Management Committee or
Remuneration Committee.
Directors may instruct the proxy on
how to vote on agenda items. All proxy
votes are to be delivered to the Chair of
the meeting by the start of the meeting
and any proxy votes received during
the course of the meeting are invalid.
Directors can hold only one proxy vote.
Circular Resolutions
The procedure to be followed in the
appointment of a proxy is:
■■
The proxy voting form contains
a declaration that the appointing
Director has followed the procedure
in and obtained the agreement of
the appointee to act on his/ her
behalf; and
■■
In the event that two proxies are
lodged in the name of a Director,
the Chair will ask that Director to
nominate which of the appointing
Directors followed the policy, and
that appointment only will stand.
Under Section 248A of the Corporations
Act, for a resolution contained in a
circular resolution to be passed, all
those entitled to vote must vote in
favour of the resolution. Section 248A is
a replaceable rule which basically means
if a company’s constitution provides a
different rule, it is the provisions of the
Constitution that prevail.
Clause 47.1 and 50.8 of the Trustee
Articles of Association provide that
only two-thirds of the Directors need to
vote in favour of the circular resolution
for it to be passed. The resolution is
then deemed to have been passed at
a meeting of the Directors held on the
day on which a Director last signed the
circular resolution.
In order to ensure that all Directors
have received and considered the
circular resolution, Cbus requires that
all Directors return the resolution and
indicate as required on the document
whether they are for, against, or
abstaining from voting, on the
resolution. The Director is also required
to sign and date their decision.
12
Reporting Sensitive Information
(Whistle Blowing) Policy
The purpose of this Policy is to:
■■
encourage the reporting of suspected instances of serious misconduct or actions that endanger the Trustee’s employees or
assets;
■■
outline the procedures in place for the reporting and investigation of matters raised by a whistleblower; and
■■
outline the measures in place to protect whistleblowers against reprisal or recriminatory action from within the Trustee
or from external parties, resulting from whistleblowing disclosures made through either the internal processes or via the
mechanisms provided by APRA.
All Directors, officers, employees and
contractors of the Trustee must comply
with this policy.
Who is a whistleblower?
The Trustee has defined ‘whistleblower’
as someone who alerts the Trustee and/
or APRA to improper behaviour within
the organisation.
It is possible that any person may
become aware of instances of serious
misconduct. Serious misconduct is
behaviour being committed or likely to
be committed that includes (but is not
limited to) the following:
■■
a criminal offence;
■■
any act of theft or fraud;
■■
any criminal or wilful damage to
Trustee property;
■■
intentional or negligent disregard for
legal or regulatory requirements;
■■
non-compliance with the Trustee’s
Fit and Proper Policy or the
requirements of the Fit and Proper
Prudential Standard;
■■
intentional or negligent disregard
for the Trustee’s policies and
procedures;
■■
any act of violence or threat of
violence within the workplace;
■■
misuse of a person’s position for
personal gain; and
■■
attempts to cover up or conceal any
of the above behaviours.
In such situations persons are
encouraged to bring the matter to the
attention of a relevant officer of the
Fund for remedial action in accordance
with the whistleblowing process
detailed this Policy.
The types of protections Cbus make
available will depend on the situation but
may include:
■■
Whistleblower Protection Officer
ensuring confidentiality in the
investigation and protecting the
employee’s identity;
■■
Cbus is committed to absolute
confidentiality and fairness in all matters
raised under this Policy.
monitoring and managing the
behaviour of other employees
related to the reported incident;
■■
offering a paid leave of absence
while a matter is investigated; and
■■
rectification of any detriment an
employee may have suffered as a
result of the report/investigation.
Whistleblowers will not be personally
disadvantaged in their employment
at Cbus by having made a report in
accordance with this Policy.
Subject to law, personnel receiving
reports will not disclose particulars of
reported matters that would suggest
the identity of the whistleblower (for
example, to Executive Management
and Directors, or external legal advisers
for the purposes of investigation
and advice) without obtaining the
whistleblower’s prior consent. Any such
disclosure to which the whistleblower
consents will be on a strictly confidential
basis. All files and records created from
an investigation will be retained under
strict security.
The Whistleblower Protection Officer
is the Executive Manager, People and
Culture who has the responsibility of
providing the whistleblower who acts
in good faith with protection against
being personally disadvantaged, and
will contact him/her to discuss his/her
concerns. She/he will act impartially
without any pre-conceived opinion on
the whistleblower or the subject matter,
or any conflicts of interest.
The appointed Whistleblower
Protection Officer is the Executive
Manager, People and Culture, or in his/
her absence, his/her delegate.
Whistleblower Investigation
Officer
and Risk, as the appointed Cbus
Whistleblower Investigation Officer will
be the authorised officer to investigate
all whistleblowing reports and will, at
all times, have direct and unrestricted
access to financial, legal and operational
assistance when this is required for any
investigation.
External whistleblower hotline
The Trustee has engaged it internal
auditor (External Whistleblower Officer)
to provide an independently monitored,
external, anonymous and toll free phone
number for all Directors and Fund staff
to report their concerns of inappropriate
behaviour or unethical conduct.
The hotline is monitored by trained and
experienced forensic professionals
who interview the caller to ensure all
available and relevant facts are obtained.
A report is then produced and provided
to the Whistleblower Investigation
Officer (Executive Manager, Governance
and Risk) within 24 hours of receipt.
Cbus
Manual
Reporting Sensitive
Blowing) Policy
The Whistleblower Process
All Cbus staff, contractors and
consultants are encouraged to
raise serious concerns through the
usual reporting and escalation lines.
This would normally be through
the individual’s manager in the first
instance.
It is only when the normal reporting
lines have been exhausted, and the
whistleblower is not satisfied that the
matter has been adequately dealt with,
that a formal whistleblower report
should be considered.
If the whistleblower believes that his or
her manager is involved in the improper
conduct then it may not be appropriate
for the whistleblower to bring his or
her concerns to his or her manager’s
attention. In these instances, the
whistleblower may go directly to the
Executive Manager, Governance and
Risk or the CEO.
If the whistleblower believes that they
are unable to report their concerns
to their manager or to the Executive
Manager Governance and Risk or the
CEO, or that the matter has not been
dealt with adequately, then they may call
the external whistleblower hotline.
In extraordinary circumstances,
after the above protocols have been
exhausted, whistleblowers may report
the matter to the Fund Chair, the
external auditor of the Fund or to APRA.
The Trustee is obliged not to constrain,
impede, restrict, or discourage the
disclosure or provision of information
on any such matters.
Assessing a whistleblower report
The External Whistleblower Officer
is responsible for conducting a
preliminary investigation into any report
received from a whistleblower via the
whistleblower hotline. The objective
of the preliminary investigation is for
the External Whistleblower Officer to
determine whether or not the reported
matter is legitimate.
All Cbus employees are required to
co-operate with all parties involved
in the investigations, and to treat the
investigations in absolute confidence.
Any employee revealing the presence
of an investigation or details contrary
to this Policy may be subjected to
disciplinary action.
The Whistleblower Investigation Officer
must ensure that all members of the
investigation team are independent
of both the Whistleblower and any
person(s) who may be the subject of the
allegations.
A formal report will be produced and
given to the CEO for determining the
appropriate course of action to be
taken.
If the External Whistleblower Officer
makes an assessment that a reported
matter is not legitimate, the matter
will be referred to the Whistleblower
Investigations Officer (Executive
Manager, Governance and Risk) to
resolve the matter directly. A report
detailing the matter, reasons for the
assessment and rectification actions
implemented will be prepared by the
Whistleblower Investigations Officer.
Any documents pertaining to a
Whistleblower Report, including
subsequent investigations, findings,
recommendations and meeting minutes
will be kept in secure storage by the
Whistleblower Investigation Officer.
Exceptions to this process
All matters determined by the
Whistleblower Investigation Officer to
be legitimate will be referred directly
to the CEO with a report prepared by
the Whistleblower Investigation Officer
detailing the matter and preliminary
investigation conclusions.
Any individual who is the subject of an
allegation and is under investigation will
be given a fair opportunity to respond to
the allegation.
Where the matter has been reported to
an External Whistleblower Officer and is
clearly a Human Resources issue, it will
be referred to the Executive Manager,
People and Culture for consultation and
appropriate action if warranted.
Investigation of the matter
The CEO and Executive Manager,
Governance and Risk will review all
referred whistleblower disclosures to
confirm the legitimacy of the report
and to determine whether a further
investigation into the reported matter
is required.
A whistleblower investigation team
primarily consists of the Executive
Manager, Governance and Risk and the
Executive Manager, People and Culture.
and Risk may appoint additional
members to join this Investigation Team
as he/ she thinks fit. External assistance
may be obtained as and when required.
Where a whistleblower report relates
to the CEO or a member of the
Governance and Risk team, the External
Whistleblower Officer will provide its
report to the Chair of the Board or the
Chair of the Audit and Risk Management
Committee.
The Chair will determine in conjunction
with the External Whistleblower Officer
and the Whistleblower Protection
Officer, the appropriate steps to be
taken including the composition of any
investigation team to be formed. The
Audit and Risk Management Committee
will review the investigation report
produced by the External Whistleblower
Officer and determine the appropriate
course of action to be taken.
Finalising the whistleblower
process
The CEO (or Fund Chair where the CEO
is the subject of the report)) will review
the investigation team’s findings and
recommendations before determining
the appropriate course of action to be
taken. Any determination made finalises
the internal Whistleblower process. The
Whistleblower may still have recourse
to external processes depending on the
circumstances.
Any documents pertaining to a
Whistleblower Report, including
subsequent investigations, findings,
recommendations and meeting minutes
will be kept in secure storage by the
Whistleblower Investigation Officer.
Cbus
Manual
Reporting Sensitive
Blowing) Policy
Confidentiality
No Retaliation
Maintaining confidentiality is critical
in ensuring that no reprisal or
recriminatory actions are taken
against the whistleblower.
The Trustee will ensure that no person
who in good faith reports serious
misconduct by a Director, manager,
staff member or persons associated
with Cbus, shall suffer harassment,
retaliation or adverse consequences.
Accordingly, all whistleblower
disclosures will be treated in the
strictest of confidence and all
reasonable steps will be taken to protect
the identity of the whistleblower where
the report is made in good faith.
It is important to note, however,
that in order to effectively carry out
investigations, it will be necessary
to reveal, on a confidential basis, the
nature of the disclosure made by the
whistleblower to those with a ‘need
to know’ - including those involved in
the investigation process. It will also
be necessary in most cases to disclose
the facts of the matter to any and all
person(s) who may be the subject of the
allegation, thereby ensuring that they
are afforded an opportunity to defend
themselves against the allegations.
This does not include the identity of the
whistleblower.
If the whistleblower has been involved
in improper conduct, he/she may be
subject to disciplinary or remedial
action as a result of any investigation.
Although the act of making a reportable
disclosure will not in itself protect the
whistleblower from the consequences
of improper conduct in which they may
have been involved, it may be taken into
account and may potentially mitigate
any action that may be taken against the
whistleblower.
It is important to note that disclosures
made on an anonymous basis do not
qualify for protection under the SIS Act.
Reporting
The Whistleblower investigation Officer
will provide regular reporting on any
whistleblowers to the Audit and Risk
Management Committee.
Where criminal acts have been identified
by whistleblowers, they will be reported
to the police. If the matter relates to a
regulatory breach, it will be dealt with in
accordance with the Trustee’s Breach
Reporting Policy.
Reports may be provided to internal and
external audit as appropriate.
Training and awareness
The Governance and Risk Business
Unit will provide relevant training to all
Directors and employees to ensure that
they understand the requirements of
this Policy. This includes how details of
the external whistleblower hotline and
how to recognise and report suspicions
of serious misconduct.
This Policy must be given to all Directors
and employees on commencement
of employment to highlight the
requirements and their obligations
under the Policy and procedures.
SIS Act Protection of
Whistleblowers
To be protected as a whistleblower
under the SIS Act an individual must be:
■■
A Director, officer, employee or
contractor of the Trustee; or
■■
An officer, employee or contractor of
the Fund’s Custodian or Investment
Manager; or
■■
An employee of a contractor to the
Trustee, Custodian or Investment
Manager.
Acting in Good Faith
Any person who has information may
make a complaint concerning suspected
or actual serious misconduct must be
acting in good faith and have reasonable
grounds for believing the information
disclosed indicates serious misconduct
under this Policy.
Disclosures qualifying for
whistleblower protection under
the SIS Act
The disclosure of information qualifies
for protection under the SIS Act if all of
the following conditions are met:
1. The disclosure is made to:
■■ A person authorised by the Trustee
to receive disclosures of that kind
(Executive Manager, Governance
and Risk and the CEO);
■■ A Director of the Trustee;
■■ APRA; or
■■ The Fund’s auditor.
2. The discloser informs the person to
whom the disclosure is made of the
discloser’s name before making the
disclosure (i.e. – does not disclose
on an anonymous basis); and
3. The information concerns
misconduct, or an improper state of
affairs or circumstances in relation
to the Trustee or Fund; and
4. The discloser considers the that
the information may assist a person
referred to in paragraph 1 (above) to
perform their functions in relation to
the Trustee or Fund; and
5. The disclosure is made in good faith.
Whistleblower protections under
the SIS Act
If a person makes a disclosure that
qualifies for protection under the SIS Act:
■■ the person is not subject to any civil
or criminal liability for making the
disclosure;
■■ no contractual remedy may be
enforced against the person on the
basis of the disclosure;
■■ the person has qualified privilege in
respect of the disclosure;
■■ the person’s contract must not be
terminated on the
■■ basis that the disclosure constitutes
a breach of contract; and
■■ the information disclosed is not
admissible in evidence against the
person in criminal proceedings other
than proceedings in respect of the
falsity of the information.
Prohibition of victimisation under
the SIS Act
A person who actually causes or
threatens detriment to a whistleblower
commits an offence under the SIS
Act which is subject to a penalty of
imprisonment for 6 months.
13
Policy Governance Framework
Cbus has established a simple and pragmatic framework for the
governance of all Fund Policies.
The framework consists of three (3)
main components:
■■
Rules for new and current Policies;
■■
the Policy Administration Schedule
(for internal use only); and
■■
the Cbus Policy Register.
The framework provides the Fund with
a unified methodology and approach
towards Policy creation, management
and governance.
The framework rules apply across all
Policies created, owned and managed
by the Trustee.
01
Attachment
Skills Sets
This attachment sets out the skill sets
that the Trustee has determined are
required for the successful operation
of the Fund taking into account the
following factors:
1. Cbus is a public offer fund that
focuses nationally on the building/
construction and allied industries;
2. Size, business mix and complexity
of the Fund;
3. Equal representation model
with one independent Director
position;
4. Accumulation fund with an
income stream component;
5. The Trustee is authorised to offer
a MySuper product;
6. The requirements of Prudential
Standards applying to
superannuation;
7. Investment choice is offered;
8. The investment strategies of the
Fund;
9. Direct property focus;
10.Australian Financial Service
licensee-authorised to provide
general advice;
Taking into account the above factors
the required skill sets and knowledge
areas of the Fund are:
1Investments;
2.Property;
marketing);
4. Audit and Financial;
5. Governance and Risk Management
(including RSE licensee law); and
6 Remuneration and People.
Skills Sets
Each skill set is comprised of three
tiers:
Tier One – All Responsible
Persons to meet this within
12 months of appointment.
T
ier Two – more in-depth
knowledge and applications of
skills-Responsible Persons sitting
on Committees are expected
to meet this tier within 12-18
months of joining a committee.
Tier Three – Expert
Assessment
Prior to appointment Directors are
asked to complete a self-assessment
against the Skills Sets, which is
reviewed by the Fund Chair. Executive
Managers also complete a selfassessment against the skills set prior
to appointment, which is reviewed by
the CEO.
Detail is provided around each
tier and the minimum number of
Responsible Persons who should
meet each tier. Training or knowledge
base information is also provided
as a guide.
Individual Director skills are reviewed
as part of the annual assessment
of Board and individual Director
performance.
11.Outsourced services of the
Fund: administration and
IT, custodianship of assets,
investment management,
group life insurance and financial
planning;
12.Business planning and strategies
of the Fund; and
13.External risk environment.
Attachment 01:
Skills Sets
Cbus
Manual
Investment:
Investments
Tier One
Skill sets
Training/Knowledge Base
Should demonstrate an understanding of the following:
1. Completion of RG 146 or similar course.
■■
investment principles (including risk and return,
diversification, liquidity etc.);
2. Induction session with Investment Team.
■■
the characteristics of the major asset classes;
■■
the process for formulating investment beliefs and
setting investment objectives and strategy including
the range of factors a Trustee must take into account;
and
■■
Investments
Tier Two
the Trustee’s Investment Governance Framework and
its constituent policies and procedures.
Should demonstrate an understanding and ability to apply:
3.Obtain a good understanding of the Investment
Governance Framework and its constituent policies
and procedures including:
■■
the Investment Strategy for Fund and each
investment option; and
■■
Investment Policy Statement.
4. Board and Investment Committee training.
1. Investment Committee induction.
■■
investment principles (including risk and return,
diversification, liquidity etc.);
2.Investment Committee attendance, participation and
training.
■■
the characteristics of the major asset classes;
■■
the process for formulating investment beliefs and
setting investment objectives and strategy including
the range of factors a Trustee must take into account;
3.Obtain a more in-depth understanding of the
Investment Governance Framework and its constituent
policies and procedures including:
■■
the Trustee’s Investment Governance Framework and
its constituent policies and procedures; and
the Investment Strategy for Fund and each
investment option;
■■
Investment Policy Statement
■■
investment processes,
■■
Liquidity Management Plan;
■■
implementation and risk management including legal,
tax, fees, governance and investment structures.
■■
Due Diligence Policy and processes;
■■
Asset valuation policy; and
■■
Policies for the management of derivatives
and currency.
■■
External courses/conference:
4. CIE Basic Investment Courses.
5. Other specific investment courses.
6. Australian Super Investment Conference.
Investments
Expert
Should be able to demonstrate:
■■
In-depth knowledge of the above items;
■■
Understand economic factors and the impact on
investment markets.
1.Relevant work experience in investment related or
economic field.
Attachment 01:
Skills Sets
Cbus
Manual
Property:
Property
Tier One
Property
Tier Two
Property
Expert
Skill sets
Should demonstrate an understanding of where property
sits in the investment strategies and the Business strategy
of the Fund.
1. Cbus Property Business Plan.
1.Investment Committee attendance, participation
and training.
■■
The process for developing a property investment
strategy;
■■
The characteristics of different underlying property
sectors e.g. commercial, retail, industrial etc.;
■■
The main drivers of property returns e.g. capital growth,
rental income, development profits; and
■■
The main drivers of risks including externally driven
impacts such as the economy and the impact on
underlying property sectors.
Should demonstrate a more in-depth knowledge of the
above and detailed understanding of property development
returns and risks.
2. Induction with Investment Team and/or Cbus Property.
Attendance at Board and Cbus Property Presentations.
Specific Property investment courses.
1. Experience within the Property Development industry.
Attendance and training at Cbus Property Pty Ltd.
Finance and Audit:
Finance
and Audit
Tier One
Finance
and Audit
Tier Two
Skill sets
Should demonstrate an understanding of the accounting
and auditing processes of the Trustee and Fund.
1. Induction session with Cbus Finance.
■■
■■
■■
Financial Statements applicable to Superannuation
Funds and the risks applicable to Financial Statement
preparation. Demonstrate an ability to apply this
understanding to the Trustee and Fund;
■■
Risk Management Framework and the constituent
policies and procedures relating to finance and
accounting; and
■■
Cbus Financial Statements and External Audit reports.
1.Audit & Risk Committee attendance, participation
and training.
2. Audit & Risk Committee Induction.
More in-depth understanding of:
Cbus budgeting process, the relevant cost outcomes of
this process including the dynamics between direct and
other management costs and investment management
costs; and
■■
Risk Management Framework and the constituent
policies and procedures relating to finance and
accounting; and
■■
Cbus Financial Statements and External Audit reports.
Internal and External audit scopes, sampling and testing
methodology and audit reporting;
Key taxation issues in superannuation and how they apply
to the Trustee and Fund.
Finance
and Audit
Expert
2. Obtain a good understanding of the:
Demonstrate a detailed knowledge of the financial,
accounting and taxation implications for superannuation
funds and the risks associated with these, including risk
mitigation processes.
Demonstrate application of this to Cbus and its Financial
Statements.
Training and courses on understanding financial statements.
1. CPA/CA Qualified; or
2.Experience in the provision of financial services such as
accounting, tax, audit/assurance and financial advice; or
3.Specialised training – in the accounting/tax/audit of
Superannuation funds.
Demonstrate awareness of the latest accounting standards
and taxation regulation amendments as applicable to Cbus.
Attachment 01:
Skills Sets
Cbus
Manual
Governance and Risk Management:
Governance
and Risk
Management
Tier One
Skill sets
Should demonstrate:
1. Completion of RG 146 or similar course.
■■
Understanding of, and ability to effectively implement,
the covenants and obligations set out in the SIS Act;
■■
Understanding of the key elements and application
of the SIS Act and SIS Regulations and Prudential
Standards; and
■■
Governance
and Risk
Management
Tier Two
2. Obtain a good understanding of the:
Understanding of the elements and application of other
RSE licensee law and trust law.
■■
Fund Governance Policy and Conflicts Management
Framework;
■■
Risk Management Framework (including the
Risk Management Strategy and Risk Appetite
Statement); and
■■
Business Continuity Management Policy.
Understanding of the Fund’s Risk Management Framework
including the Trustee’s Risk Appetite Statement and Risk
Management Strategy.
3.Induction session with Executive Manager, Governance
& Risk.
Should demonstrate more in-depth knowledge and
application of RSE licensee law and the key elements and
operation of the Trustee’s Risk Management Framework and
Conflicts Management Framework.
1. Audit & Risk Management Committee induction.
2.Board & Audit & Risk Management Committee
attendance, participation and training.
More in-depth understanding of:
■■
Risk Management Framework (including the Risk
Management Strategy and Risk Appetite Statement);
and
■■
Business Continuity Management Policy.
■■
ASFA or AIST courses, and
Other governance courses, for e.g. Australian Institute of
Company Directors.
Governance
and Risk
Management
Expert
Demonstrate a detailed knowledge of the legal and
governance requirements for superannuation funds –
demonstrate application of this to Cbus.
1. Legal qualifications; or
Detailed knowledge of risk management principles and the
key elements and operation of the Trustee’s Risk
3.Specialised training – in superannuation law or risk
management.
2.Experience in the provision of legal services and advice;
or
Management Framework. Demonstrate awareness of the
latest legal and governance requirements or proposed
changes and potential impacts as applicable to Cbus.
Cbus
Manual
Attachment 01:
Skills Sets
Operational:
(This includes Member/ Employer requirements, strategic, administration, insurance and marketing)
Operational
Tier One
Skill sets
Strategic – demonstrate an understanding of the
framework for developing the strategic direction of the Fund
and understanding of the business planning and budgeting
process.
■■
Induction session with CEO;
■■
Read and understand the Cbus Business Plan;
■■
Attendance at Board strategy days; and
■■
Attendance at Board meetings
Administration and Insurance – demonstrate an
understanding of the Trustee’s Outsourcing Framework, the
Fund’s products and services and the key elements of the
Trustee’s Insurance Management Framework including the
Insurance Strategy.
Marketing – demonstrate an understanding of the Fund’s
brand position, attributes and marketing strategies.
Member and Employer Requirements – demonstrate an
understanding of member and/or employer requirements
in the construction, building and allied industries.
Strategic
Administration and Insurance
■■
Induction session with Cbus Administration and
introduction to key administration personnel; and
■■
Understanding of the Trustee’s Insurance Management
Framework and Outsourcing Framework.
Marketing
■■
Induction session on latest member and employer
research.
Member and Employer Requirements
■■
Experience in the building and construction industry.
Understanding member and employer research.
Operational
Tier Two
Administration – understanding of structure of the
outsourced Administrator and service arrangements. Highlevel understanding of IT systems, understanding of the
Complaints Management Framework.
Marketing – more in-depth knowledge of the brand
and its attributes and how it drives service and product
development.
Insurance – a detailed knowledge of the key elements of
the Trustee’s Insurance Management Framework including
an understanding of group life risk principles and types
of cover and claims, the Fund risk profile. Understand the
operational environment including the respective roles of
the administrator, broker and insurer.
Operational
Expert
Detailed knowledge or experience within one or more of the
above areas.
1.Marketing and Member Service Committee attendance,
participation and training.
2.Induction session for new members to the Committee
including information on administration, insurance and
outsourcing.
3.Induction on the history and development of the brand.
■■
ASFA/ CMSF Conference; and
■■
AIST Administration or Insurance Conference.
■■
Other marketing conferences.
1.Experience and/or qualifications in either super
administration/group life/IT systems; or
Relevant Marketing experience and/or qualifications.
Attachment 01:
Skills Sets
Cbus
Manual
Remuneration and People:
Remuneration
and People
Tier One
Remuneration
and People
Tier Two
Skill sets
Should demonstrate:
1.Induction with the CEO and Executive Manager People
& Culture.
■■
Understanding of remuneration frameworks and
trends within Financial Services for Executive and CEO
remuneration;
■■
Understanding of the remuneration drivers within
organisations and how ‘pay’ is set and reviewed;
■■
Understanding of trends and methodologies behind
Directors fees; and
■■
Knowledge and experience of organisational
development themes and trends.
Should demonstrate:
■■
More in-depth knowledge of Directors remunerations,
various guidance notes on Directors remuneration and
disclosure.
2.Reasonable workplace experience at the Manager level
and above.
Obtain a good understanding of:
■■
Cbus Remuneration Policy.
1. Remuneration Committee induction.
2.Remuneration Committee attendance, participation
and training.
More detailed understanding of trends within the Financial
Services sector for staff and Executive salaries including
the link between performance drivers and pay and the risks
associated with performance based remuneration.
Remuneration
and People
Expert
Should demonstrate:
■■
Detailed knowledge of current and emerging trends
within remuneration of those in the Financial Services
sector; and
■■
Understanding of the employment market and economic
drivers for remuneration changes;
1.Relevant experience at organisational leadership level.
2.Relevant experience at the leadership level involved
in determining conditions of employment and
remuneration issues.
Understanding of position of the Fund against other Funds in
relation to Directors remuneration and additional benefits.
02
Attachment
Skills Matrices
This attachment sets out the skills
sets that the Trustee has determined
are required for the Board and
Committee to function appropriately.
Across the Board and each
Committee, the Trustee has agreed
that the skills mix must include
Responsible Persons with experience
in the following areas:
1.Investments;
2.Property;
marketing);
4. Audit and Financial;
5. Governance and Risk
Management (including
RSE licensee law); and
6. Remuneration and People.
The Skills Matrices are reviewed upon
the appointment or resignation of
a Responsible Person, and are also
reviewed annually by the Board and
its Committee as part of their review
process.
Cbus
Manual
Attachment 02:
Skills Matrices
Directors:
Tier One
Tier Two
Expert
Min No of Directors
Min No of Directors
Min No of Directors
Investments
17
8
2
Property
17
8
4
Audit and Financial
17
6
2
Governance and Risk Management
17
6
2
Operational
17
6
2
Remuneration and People
17
5
2
Investments
8
8
2
Property
8
8
2
Audit and Financial
8
2
0
8
4
0
Board Skills set
Investment Committee Skills set
Audit & Risk Committee Skills set
Investments
6
2
0
Property
6
2
0
Audit and Financial
6
6
2
6
6
1
Operational
6
2
0
6
3
0
Operational
6
6
2
Property
5
1
0
5
1
0
Remuneration and People
5
5
2
Marketing & Services Committee Skills set
Remuneration Committee Skills set
CEO
Executive Managers
The Trustee has determined that the
CEO must meet tier 2 knowledge
requirements across all six skill areas.
In addition, the CEO of the Trustee
must meet the expert knowledge
requirements across at least 3 skill
areas.
The Trustee has determined that,
in addition to the minimum number
stated above with regard to Directors,
the Executive Management team
must also meet a minimum skill
set. This has been determined as
every Executive Manager having
at least Tier 1 experience in the
areas of Investments, Property,
Finance & Audit, Governance & Risk,
Operational and Remuneration. In
addition, each Executive Manager
must have Expert level experience
within their respective area of work.
For example, within the area of
Governance & Risk, the Executive
Manager must possess Tier 1
experience across the areas of
Investments, Property, Finance &
Audit, Operational and Remuneration;
and Expert experience of Governance
& Risk.
03
Attachment
Propriety Factors
The propriety limb of the Fit and Proper standard must be met at all times by each Responsible Person. In determining
the ‘propriety’ of an individual to act as a Responsible Person the factors that APRA expects to be considered are listed in
column 1 of the table below and the steps that the Trustee will take in reaching a judgment are set down in column 2.
The below list is not exhaustive and demonstration of one or more criteria need not necessarily preclude an individual
from being a Responsible Person. The criteria are, however, examples of factors that would lead the Trustee to further
consideration of the individual’s status or suitability for the role.
Column 1: Whether the individual has:
Column 2: The Trustee will make these enquiries:
Demonstrated a lack of willingness to comply with legal obligations,
regulatory requirements or professional standards, or been
obstructive, misleading or untruthful in dealing with regulatory
bodies or a Court;
The Trustee will undertake appropriate searches and also obtain
a declaration from the person that none of these things have
occurred.
Breached a fiduciary obligation;
occurred.
A conflict of interest that may influence the Trustee’s, or the
individual’s, ability to carry out their role and functions with the
degree of probity and independence required or with regard to
the duty of care to superannuation fund members, or failed to deal
appropriately with such conflicts;
The Trustee will request the person to disclose all positions that he
or she holds as a Director or executive in an organisation. Also, at
the beginning of each Trustee meeting, Directors and officers are
asked to disclose whether he or she believes there may be a conflict
in relation to any of the items on the agenda.
Perpetuated or participated in negligent, deceitful or other
discreditable business or professional practices;
occurred. A bankruptcy search is conducted.
Been reprimanded, or disqualified by a professional or regulatory
body in relation to matters relating to the person’s honesty,
integrity or business conduct;
occurred.
Seriously or persistently failed to manage personal debts or
financial affairs satisfactorily in circumstances where such failure
caused loss to others;
a declaration from the person that this has not occurred. A
bankruptcy search may be conducted.
Been substantially involved in the management of a business or
company which has failed, where that failure has been occasioned in
part by deficiencies in that management;
The Trustee will undertake appropriate searches and also obtain a
declaration from the person that this has not occurred.
Is of bad repute in any business or financial community or any market;
Obtain a written reference.
Been the subject of civil or criminal proceedings or enforcement
action, in relation to the management of an entity, or commercial
or professional activities, which were determined adversely to
the individual (including by the individual consenting to an order
or direction, or giving an undertaking, not to engage in unlawful or
improper conduct) and which reflected adversely on the individual’s
competence, diligence, judgment, honesty and integrity.
The Trustee will undertake appropriate searches and also obtain a
declaration from the person that this has not occurred.
04
Attachment
Regulators
The Regulators
Australian Prudential Regulation
Authority (APRA)
Australian Securities &
Investment Commission (ASIC)
Australian Taxation Office (ATO)
Australian Transaction and
Reports Analysis Centre
(AUSTRAC)
Prudential Regulator establishes
and enforces prudential
standards and practices
designed to ensure that under
all reasonable circumstances,
financial promises made by
institutions are met with a
stable, efficient and competitive
financial system. In particular
APRA licence and register
superannuation Trustees and
funds and monitors that Funds
are operating in accordance with
the SIS Act, Prudential Standards
and operating standards.
Corporate regulator, responsible
for ensuring that company
Directors and officers carry out
their duties honestly, diligently
and in the best interest of their
company. Also the Financial
Services regulator, who license
and monitor financial services
businesses to ensure they
operate efficiently, honestly and
fairly. They promote confident
and informed participation by
investors and consumers in the
financial system.
The ATO administers tax
legislation and is the regulator for
self-managed superannuation
funds. They also manage lost
super, temporary residents and
compliance with the payment of
Superannuation Guarantee.
The Australian Transaction
Reports and Analysis Centre
(AUSTRAC) is Australia’s
anti-money laundering and
counter-terrorism financing
regulator and specialist financial
intelligence unit.
Key legislation:
Superannuation Industry
(Supervision) Act 1993 and
Regulations 1994.
Corporations Act 2001
Superannuation (Resolution
of Complaints) Act 1993
Income Tax Assessment Act
1997 Superannuation Guarantee
(Administration) Act 1992
Financial Transaction Reports
Act 1998 Anti-Money Laundering
and Counter Terrorism Financing
Act 2006

Fund Go Policies and Pr oc

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