APRA issues $10.7 million infringement notices and accepts court enforceable undertaking from OPC

The Australian Prudential Regulation Authority (APRA) has agreed to accept a court enforceable undertaking (CEU) from OnePath Custodians Pty Limited (OPC) pledging to rectify compliance deficiencies and compensate members. 

OPC has also paid $10,704,600 under infringement notices issued by APRA for alleged breaches of the Superannuation Industry (Supervision) Act 1993 (SIS Act) for failing to invest members’ default superannuation contributions in MySuper products.¹ This amount is in addition to the $1.5 million paid by OPC in June 2023 for similar conduct.²

OPC is one of four superannuation trustees owned by Insignia Financial Ltd (formerly IOOF Holdings Limited) and has approximately 700,000 members and over $37 billion in funds under management.

APRA previously applied additional licence conditions on OPC and other trustees of various superannuation funds within the Insignia group in November 2022. The conditions were imposed to address governance, accountability and risk management deficiencies within the Insignia group and to ensure that OPC would identify and compensate any members who suffered financial losses arising out of a breach of a previous APRA direction issued in December 2021. 

APRA has been closely monitoring OPC which has continued to identify further members who may have been adversely impacted by failures to direct default member contributions to a MySuper product. This has unearthed many alleged breaches of section 29WA of the SIS Act. 

While OPC has engaged an independent expert and remediated a significant number of affected members since 2022, APRA is highly concerned that new cohorts of members continue to be identified. APRA is concerned that OPC’s ongoing alleged failures to adequately implement the MySuper provisions is indicative of various ongoing cultural and governance failures within the organisation. OPC has acknowledged APRA’s concerns in the CEU and has committed to:

• identify, rectify, and remediate all members adversely affected by the breaches with input from an independent expert;
• allocate additional resources to replenish the Operational Risk Financial Requirement to 100% of the target balance of 0.25% of funds under management; and
• hold $40m of its existing Operational Risk Financial Requirement assets as an overlay until OPC has satisfied the terms of the CEU. 

APRA Deputy Chair Margaret Cole said that APRA wanted to send a clear message that trustees who breach their obligations under the SIS Act, particularly those that continue to do so, will be held to account.

“This action shows that APRA is willing to take strong enforcement action where it is warranted. These MySuper changes came into effect ten years ago. Our patience for entities who are still struggling with foundational issues, with the potential for serious impact to members, has run out.

“OPC is one of four trustees in the Insignia group, which is one of the superannuation industry’s largest participants. APRA expects a commensurately high standard of governance and risk management. 

We expect trustees to adhere to the law and to have robust governance, compliance and risk management frameworks embedded and operationalised to prevent, detect and swiftly remediate potential breaches of their obligations,” Ms Cole said.

The CEU is available on the APRA website at: Enforceable undertakings register | APRA.