APRA Cracks Down on Mercer Super for Risk Management Failures

Finance

Article: The Australian Prudential Regulation Authority (APRA) has imposed additional licence conditions on Mercer Superannuation (Australia) Limited (Mercer Super) to address significant risk management and compliance management deficiencies. Mercer Super, which manages over $70 billion in funds for approximately 850,000 members, has acknowledged breaches of prudential standards SPS 220, SPS 231, and SPS 232.

These breaches were identified during APRA’s ongoing prudential supervision of Mercer Super, including a prudential review conducted in October 2023. In response, APRA has imposed new licence conditions that came into effect on 27 May 2024, requiring Mercer Super to implement remediation actions and provide an attestation from the Trustee Chair that these actions are complete and effective.

APRA Deputy Chair Margaret Cole stated that the new licence conditions are intended to drive substantial governance and risk management improvements at Mercer Super and protect the interests of its members. Mercer Super’s significant growth in recent years necessitates appropriate controls to ensure frameworks and systems continue to serve the needs of its members.

Cole emphasized that APRA expects trustees to have robust risk management frameworks and to proactively manage systems and processes, including in critical areas like business continuity management and the oversight of service providers. APRA is prepared to take strong steps, including enforcement action, where a trustee’s operational resilience management is substandard.

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