The Board of Credit Union Australia Ltd (CUA) is responsible for the corporate governance of CUA and its controlled entities. This statement generally describes the practices and processes CUA has adopted to ensure sound management of CUA within the legal framework under which it operates. The key principles are accountability, disclosure and independence.
CUA is an Authorised Deposit-taking Institution (ADI) supervised by the Australian Prudential Regulation Authority (APRA) under the Banking Act 1959 (Cwlth). CUA is also supervised by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001 (Cwlth) and has been granted an Australian Financial Services Licence.
The Board‘s primary role is to protect and enhance long-term member value. To fulfil this role, the Board is responsible for providing strategic guidance to CUA and its related bodies corporate (the “CUA Group”); monitoring and providing effective oversight of CUA management; overseeing CUA’s risk management systems; and acting as an interface between CUA and its members.
The Board has delegated responsibility for the operation and administration of CUA to the Chief Executive Officer (CEO) and executive management team.
The role and responsibility of the CUA Board is set out in detail in CUA’s Board Charter.
The Board holds regular scheduled meetings each year, as well as strategic planning meetings and any other meetings that may be required from time to time.
To assist in the execution of its responsibilities, the Board has established a number of key committees, each with its own charter that are reviewed annually. Details of the various Board committees are outlined below.
The constitution of CUA specifies that the number of directors shall be between six and nine and that their term of office is normally three years. Currently the Board comprises eight directors.
The Board comprises seven independent non-executive directors and one executive director (the CEO). In determining whether a director is independent, the Board has regard to APRA’s Prudential Standard APS510 (Governance). The Board does not consider that the length of service on the Board has impacted any individual director’s ability to act independently and in the best interest of members.
In accordance with the Corporations Act and CUA’s constitution, directors must keep the Board advised of any interest that could potentially conflict with the interests of CUA. The Board has developed guidelines to assist directors in disclosing potential conflicts of interest. Directors’ disclosures are formally updated annually as part of CUA’s Fit and Proper process. Transactions between non-executive directors and CUA are subject to the same terms and conditions that apply to members.
The Board is committed to continual improvement and has in place an annual evaluation process for assessing the Board and individual directors.
Each director has the right of access to all relevant credit union information and to CUA’s management. Where there is a legal issue that may affect a director’s ability to exercise his or her duty as a director and/or a potential or actual conflict of interest, subject to prior consultation with and approval of the Chair, a director may seek independent professional advice from a suitably qualified adviser in the field, at the expense of CUA.
Each member has two relationships with CUA: as a customer and as an owner or shareholder. As customers, members exercise choice by selecting the products and services they believe best suit their individual needs. As owners and shareholders, members have the right and are encouraged to participate in some of the activities of their credit union, including nominating and electing other members as directors, and attending or participating at general meetings, either in person or by proxy.
To maintain member confidence in the integrity of the credit union, CUA directors have adopted and adhere to a directors’ code of conduct, which is based on the code developed by the Australian Institute of Company Directors.
CUA is committed to the principles of mutuality and is driven by its vision and values. The principles established here guide CUA’s behaviour and interaction with customers, other credit unions, staff and the broader community.
CUA is also committed to the privacy of member information.
CUA has in place a whistleblower protection program to facilitate and encourage confidential reporting of unacceptable or undesirable conduct.
CUA manages a diverse range of significant risks. To this end, the Board of CUA and its subsidiaries are committed to identifying and managing these risks throughout the CUA group. The Board, through the CEO, has established a risk management system for assessing, monitoring and managing these risks.
The Board Risk Committee receives and reviews regular risk management reports.
In determining director remuneration, the Board obtains independent advice on the appropriateness of remuneration given trends in comparable companies. Remuneration levels are designed to attract and retain appropriately qualified and experienced non-executive directors. Non-executive directors do not receive any performance-related remuneration. Directors’ remuneration covers all CUA Board activities, membership of committees and subsidiary companies and includes any superannuation contributions paid on behalf of a director. Subject to meeting specific criteria, directors retiring from the Board may receive a termination payment of up to three years directors’ fees.
Non-executive directors may maintain loans and credit facilities from CUA at normal member rates of interest and therefore no additional remuneration is obtained by way of a benefit.
To assist in the execution of its responsibilities, the Board has established a number of committees, each with its own charter that is reviewed annually. Details of the Committees currently in place are outlined below.
This committee assists the Board by reviewing the significant remuneration related policies and practices of CUA. It has been established to ensure compliance with APRA Prudential Standard APS 510 (Governance). The key responsibilities of the committee include:
The committee is required to have at least two members and all members of the committee must be non-executive directors. A majority of members must be independent.
The committee meets as and when required.
The Board Audit Committee is established by the Board of Directors of CUA to assist the Board in:
The committee is required to have at least three members and all members of the committee must be non-executive directors. A majority of members must be independent. The Chair of the CUA Board may not be the Chair of the BAC.
This committee also acts as the audit committee for one of CUA’s subsidiaries, CUA Financial Planning Pty Ltd (CUAFP). CUA Health Limited (CHL) and Credicorp Insurance Pty Ltd (CCI), each have their own separate board audit and risk committees.
The Board Risk Committee is established by the Board of Directors of CUA to assist the Board in:
The committee is required to have at least three members and all members of the committee must be non-executive directors. A majority of members must be independent.
This committee also acts as the risk committee for CUAFP. CHL and CCI each have their own board audit and risk committee.
This committee assists the Board and supports management in progressing major strategic issues and opportunities as required between Board meetings.
The duties and responsibilities of the committee include:
The committee is required to have at least three members, with the majority of members being independent non-executive directors. One of these directors is required to chair the committee. The CEO is also required to be a member of the committee.
The Board Nucleus Committee was established in May 2012 to assist the Board in discharging its governance and oversight responsibilities in relation to the implementation of a new core banking system for CUA (the Nucleus Project). The continued operation of the Committee shall be reviewed by the Board within the three months following completion of the Nucleus Project.
The activities of the subsidiaries in the CUA group are overseen by their own Board of directors, principally drawn from the CUA Board and CUA executive management. These entities operate within the Group’s Corporate Governance Framework.
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