APRA pings Diversa Trustees over its high fees, poor performance and complexity

Diversa Trustees must report back to APRA on how well it complies with a new set of rules governing its operations.

The prudential regulator has imposed a series of new rules on Diversa Trustees after a review highlighted concerns about its high fees and poor performance.

The Australian Prudential Regulation Authority closely examined superannuation provider Diversa Trustees, which has almost 320,000 members and oversees $11bn in retirement funds.

APRA has hit Diversa with new registrable superannuation entity licence conditions over concern about its capacity to manage risks, and meet regulatory and compliance obligations.

The regulator ordered Diversa to enhance its governance and risk frameworks, noting in particular its concern over the trustee’s third-party service providers.

APRA noted Diversa’s complex structure and operations created a “heightened inherent business risk”.

The regulator said it was concerned about Diversa’s capacity to deliver outcomes for members, given its high fees and poor investment performance.

Diversa’s MySuper products were among the worst-performing funds in APRA’s performance Heatmap.

The regulator ordered Diversa to improve member outcomes, and to develop and implement a new plan to address “persistently high fees”.

APRA deputy chair Margaret Cole said the regulator’s new rules for Diversa set “baseline expectations” for independent trustees in the superannuation sector.

“The inherent complexity of the independent trustee model, with one trustee having oversight over a substantial number of funds, sub-funds and products, requires significant resourcing to ensure quality member outcomes,” Ms Cole said.

“These licence conditions set the minimum standard for governance, risk, outsourcing and oversight, and member outcomes to ensure that Diversa is in the best position to continue as a trustee in the long term.”

Diversa will be required to report back to APRA on how well it implements the new rules.

Diversa is one of a handful of private registrable superannuation entity licensees offering its oversight and APRA-regulated status to private operators looking to set up retirement products.

These include the ING Superannuation Fund, the Future Super Fund, and the Tidswell Master Superannuation Plan among its 22 funds.

These capture sub-plan products including Spaceship Super, Superhero Super, and Cruelty Free Super.

The Australian Securities and Investments Commission came down against Cruelty Free Super in December over alleged greenwashing, claiming the fund had misstated its investment screens.

Diversa Trustees was sold to a syndicate of buyers, including New York-based financiers Teddy Wasserman and Matthew Kibble, and Vista Equity partners after Sargon Capital was moved into administration.

Diversa Trustees chief executive Andrew Peterson was contacted for comment.