APRA agrees to court enforceable undertaking from AMP Super

The Australian Prudential Regulation Authority (APRA) has accepted a court enforceable undertaking (CEU) from AMP Superannuation Limited and NM Superannuation Property Limited, collectively called AMP Super, vowing to rectify their governance and risk management deficiencies.

AMP Super, a part of the AMP group of companies (AMP Group), controls two superannuation funds with estimated assets of $116 billion.

APRA's acceptance of the CEU follows a lengthy investigation into AMP Super's past conduct that was believed to have resulted in a myriad of potential breaches of the Superannuation Industry (Supervision) Act 1993.

After accepting the CEU, APRA has recognised AMP Super's improvements. However, it warned that the improvements must be further embedded and operationalised.

“AMP is one of the wealth industry's largest and best-resourced companies, and APRA expects a commensurately high standard of governance and risk management,” APRA Member Margaret Cole.

“While we acknowledge the efforts AMP Super has made towards improving its internal systems, the issues addressed by the CEU show there is further work to do. By offering this CEU, AMP Super has committed to [fixing] promptly remaining legacy issues that have existed within its superannuation business and ensure affected members are appropriately remediated.”

Read more: APRA finalises revisions to Prudential Standard SPS 250

AMP Super has acknowledged APRA's concerns, and under the terms of the CEU, the super fund vowed to:

• Identify and address the root causes of the potential breaches and issues with input from an independent expert;
• Rectify areas of concern;
• Remediate members who have been affected by aspects of the conduct dealt with by the CEU (noting that AMP Super has already remediated members in some cases); and
• Enhance its government controls, risk management, and processes for acting in members' best interests.

Aside from AMP Super, Australian insurers must implement major changes due to several reforms to improve consumer outcomes. The regulatory changes that commenced in October include:

• Deferred sales model for add-on insurance;
• Anti-Hawking restrictions;
• Product design and distribution obligations;
• Avoiding misrepresentation;
• Breach reporting obligations;
• Unfair contract terms; and
• Claims handling as a financial service, which will not come into effect until January 01, 2022.