The Australian Prudential Regulation Authority (APRA) has imposed additional licensing conditions on Mercer Superannuation (Australia) Limited (Mercer Super) to ensure it addresses the risk management and compliance deficiencies identified by APRA.

Mercer Super is the trustee for the Mercer Super Trust and the Mercer Portfolio Service Superannuation Plan, which collectively serve approximately 850,000 members and manage over AUD 70 billion in funds.

These risk management and compliance deficiencies were discovered during APRA's ongoing prudential supervision of the trustee, including a prudential review conducted in October 2023.

Subsequently, Mercer Super acknowledged significant breaches in its adherence to prudential standards SPS 220 Risk Management, SPS 231 Outsourcing, and SPS 232 Business Continuity Management.

Under the new licensing conditions effective from May 27, 2024, Mercer Super must:

1. Develop and implement a remediation plan in collaboration with an independent expert to address the deficiencies identified by APRA;
2. Appoint an independent third party to conduct an operational effectiveness review of Mercer Super's risk management and compliance framework upon completion of the remediation plan;
3. Develop a plan to rectify any deficiencies identified during the operational effectiveness review.

Upon completing the operational effectiveness review, Mercer Super must provide APRA with a certification from the trustee's chair confirming that the remediation actions have been completed and are effective, and that the entity complies with prudential standards SPS 220, SPS 231, and SPS 232.

APRA Deputy Chair Margaret Cole stated, "We are imposing these conditions to drive significant improvements in Mercer Super's governance and risk management and to protect the interests of its members. APRA expects trustees to have robust risk management frameworks and to proactively manage systems and processes, including in key areas such as business continuity management and service provider oversight. APRA is prepared to take strong action, including enforcement measures, to address inadequate management of operational resilience by trustees."