Australian Prudential Regulation Authority imposes additional licence conditions on Australian Ethical Superannuation over related-party expenditure controls

The Australian Prudential Regulation Authority (APRA) has imposed additional licence conditions on Australian Ethical Superannuation Pty Ltd (AES), trustee of the Australian Ethical Retail Superannuation Fund, following concerns about its expenditure management. APRA’s review, conducted as part of intensified scrutiny of fund expenditure, found deficiencies in the robustness of AES’s approach to related-party expenditure, particularly around investment management agreements with its parent company, Australian Ethical Investments. APRA said AES has not demonstrated it has adequate processes to scrutinise and justify that fees paid to its parent are consistent with members’ best financial interests. The new licence conditions require AES to appoint an independent third party to review and recommend improvements to these outsourcing decisions, strengthen compliance with key regulatory duties, and implement any recommendations made.