APRA shows power

THE Australian Prudential Regulation Authority (APRA) has used new powers to obtain its first ‘enforceable undertaking’ from the trustees of a superannuation fund.

The undertaking is designed to protect the 58 members of the Media Labs Superannuation Fund pending the rollout of their benefits to a new fund.

APRA said it identified issues involving the investment strategy adopted by the trustees, the nature of and liquidity of fund assets, and whether the employer-sponsor’s dealings with the trustees were on an arm’s-length basis, as required.

Specifically, APRA said the major asset of the fund was specialised recording equipment leased to the employer-sponsor.

The undertaking provides for the trustees to sell the specialised equipment, recover all unpaid rent, and call a meeting of members to advise them of the closure of the fund.

The cost of the rectification is to be borne by the three trustees and not charged to the members.

The trustees also have undertaken that they will not act as responsible officers of any APRA-regulated entity for three years.

APRA commented that enforceable undertakings can provide an effective tool to enable it to address prudential concerns in a superannuation fund such as in this case. Undertakings such as this can be enforced via application to the Federal Court.

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