Deloitte finds deficiencies in Cbus best financial interests duty processes
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The news: Deloitte has found that superannuation fund Cbus has failings in the design and operation of its best financial interests duty (BFID).
The context: In its independent report, Deloitte said in its process and governance of complying with BFID Cbus lacked consistency, appropriate process, appropriate governance, and necessary rigour.
Due to these shortcomings in documentation, systems and processes, Deloitte said it was unable to conclude whether expenditure decisions were made for the "sound and prudent management of the trustee's business operations" nor if they achieved the intended purpose.
The report did find that all directors on the Cbus board met the "fit and proper" test.
The report also included 26 recommendations with respect to the design and operation of the BFID arrangements which the super fund said it had accepted in principle.
The Australian Prudential Regulation Authority (APRA) received the final report on 29 November, which Cbus was required to publish as part of additional licence conditions imposed by the regulator on the fund.
Cbus had additional licence conditions imposed by APRA in August following allegations regarding serious misconduct within the Construction, Forestry and Maritime Employees Union (CFMEU).
What they said: "Cbus acknowledges the seriousness and importance of the work required to strengthen the Fund’s systems design, frameworks, policies, processes, governance and reporting as identified in the independent review to become a better, stronger fund for our members," Cbus said in a statement.
Cbus has already begun this important work, including to develop improvements in the way the Fund documents the value that industry partnership arrangements generate for the Fund and our members," the fund said in a statement.
"Cbus will now work with Deloitte, as required by the licence conditions to develop an action plan to address each of the recommendations in the review to be approved by APRA."
Deloitte said in its report that its "assessment is not an assessment of the individual cases we looked at, nor a legal review, but on the process and governance of complying with BFID."
"It is our assessment that lack of consistency, appropriate process, appropriate governance, and necessary rigour, are all areas for improvement and currently lacking for the determination as to whether expenditure decisions have been made in the best financial interests of members," the report said.
"This is not to question intent or whether ultimately decisions are in the best financial interests of members or not — it’s just that the documentation, systems and processes do not allow for that decision to be concluded clearly."
The sources: Cbus media statement, Deloitte independent review into Cbus
