The Australian Prudential Regulation Authority (APRA) has imposed new conditions on AMP Limited’s superannuation businesses including board renewal and the removal of conflicts of interest.
In a move which represented its second-ever use of its new broader enforcement powers, the regulator announced today that it had issued directions and additional licence conditions to AMP Superannuation Limited and N.M. Superannuation Proprietary Limited.
It said it had imposed the directions and additional licence conditions to address a range of concerns regarding AMP Super’s compliance with the Superannuation Industry (Supervision) Act 1993 (SIS Act).
APRA said the action arose from issues identified during APRA’s ongoing prudential supervision of AMP Super, along with matters that emerged during the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The regulator’s announcement said the new directions and conditions were designed to deliver enhanced member outcomes by requiring AMP Super to make significant changes to its business practices.
“Areas identified for improvement include conflicts of interest management, governance and risk management practices, breach remediation processes, addressing poor risk culture and strengthening accountability mechanisms. The directions also require AMP Super to renew and strengthen its board.”
“Additionally, APRA requires AMP Super to engage an external expert to report on remediation and compliance with the new directions and conditions,” the APRA announcement said.
The announcement said this was the second time APRA had used the broader directions power that was granted in April following the passage of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No 1) Bill 2019. It also demonstrates APRA’s commitment to embedding the “constructively tough” enforcement appetite outlined in April’s new Enforcement Approach.
AMP has formally responded to the APRA move stating that it will fully implement the directions and additional conditions and that it had been working constructively with APA and had already taken action on a number of the issues raised.
It said that it had in May expanded the superannuation trustee boards to broaden the range of skills and experience and that this, together with a new trustee operating model, was designed to strengthen the independence of the trustees and ensure they continued to work in the best interests of members.
AMP said that, in addition, it had significantly reduced fees on its flagship MySuper products as well as reducing fees on its MyNorth platform.