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APRA hits Diversa with additional licence conditions over prudential concerns

By Reporter
2 minute read

According to the prudential regulator, the new licence conditions set the minimum standard for governance, risk, outsourcing, oversight and member outcomes.

APRA has imposed additional licence conditions on Diversa Trustees, which it says set the baseline expectations for independent trustees within the superannuation industry.

According to the regulator, the new registrable superannuation entity (RSE) licence conditions have been designed to address prudential concerns relating to a number of key areas.

These include the adequacy of Diversa’s resources to manage risks and meet regulatory and compliance obligations, the heightened inherent business risks driven by the complex structure and operations of the firm, and concerns regarding Diversa’s ability to deliver quality member outcomes, including in relation to high fees and poor investment performance.

APRA said that the additional conditions also seek to codify recommendations from a third-party review of Diversa’s operating model, which included matters relating to governance, risk management, and outsourcing and oversight.

“The inherent complexity of the independent trustee model, with one trustee having oversight over a substantial number of funds, sub-funds and products, requires significant resourcing to ensure quality member outcomes,” said APRA deputy chair Margaret Cole.

“These licence conditions set the minimum standard for governance, risk, outsourcing and oversight, and member outcomes to ensure that Diversa is in the best position to continue as a trustee in the long term.”

Under the new licence conditions, Diversa is required to enhance its governance and risk frameworks, with a particular focus on third-party service providers.

The firm is also required to improve member outcomes through the development and implementation of a plan to address persistently high fees and to conduct an independent review to ensure that APRA’s concerns have been adequately addressed.

Diversa was reported to have approximately 320,000 members and more than $11 billion in funds under management.

Late last year, the firm was issued an infringement notice by ASIC in relation to allegations of greenwashing for the super product Cruelty Free Super.