Corporate Governance

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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 and an Australian Credit Licence.

Role of the Board

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.

Board processes

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.

Composition of the Board

The constitution of CUA specifies that the number of directors shall be a minimum of six and that their term of office is normally three years. Currently the Board comprises nine directors.

The Board comprises eight 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 CPS510 (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.

Conflict of interest

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.

Board performance assessment

The Board is committed to continual improvement and has in place an annual evaluation process for assessing the Board and individual directors.

Independent professional advice and access to credit union information

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.

Member participation

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.

Ethics

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. For further information on how the CUA Group respects the privacy of our members personal information, visit Privacy and Disclaimer.

CUA has in place an independent whistleblower protection program to facilitate and encourage confidential reporting of unacceptable or undesirable conduct.

Risk management

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.

Remuneration policies for directors

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 one year's directors' fees based on the average fees of the last three years.

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.

Board committees

To assist in the execution of its responsibilities, the Board has established a number of committees, each with its own charter. Details of the Committees currently in place are outlined below.

Board Remuneration Committee

The Board Remuneration Committee (the Committee) is established by the Board of Directors of Credit Union Australia Ltd (CUA) to assist the Board in fulfilling its corporate governance responsibilities in regard to remuneration matters and to assist the Board by assessing all persons seeking election as a director under Appendix 3 of the CUA Constitution. The key responsibilities of the committee include:

  • conduct regular reviews, monitor and make recommendations to the Board on CUA's Remuneration and Fit and Proper Policy. This must include an annual assessment and report to:
    • the CUA Board, as to the Remuneration Policy's effectiveness and compliance with the requirements of CPS 510;
    • the CUA Board, as to the Fit and Proper Policy's effectiveness and compliance with the requirements of CPS 520; and
    • (the BRC, as to the alignment of CUA's Remuneration Policy and Fit and Proper Policy with CUA's risk management framework and prudent risk taking;
  • make annual recommendations to the Board on the remuneration of the CEO, direct reports of the CEO and other persons whose activities may, in the Committee's opinion, affect the financial soundness of the CUA Group (including responsible persons as defined under CPS 520 Fit and Proper);
  • make annual recommendations to the Board on the remuneration of the categories of persons covered by the Remuneration Policy (other than those persons for whom such recommendations are already required under paragraph 4.2);
  • consider and approve people related strategies aimed at moving CUA towards being recognised as an equal opportunity employer and an employer of choice;
  • review and make recommendations to the Board on appropriate incentive scheme targets (short and long term) designed to drive performance of CUA employees, including:
    • CUA's remuneration and incentive framework and its alignment with risk management and control;
    • the use of key performance indicators (KPIs); and
    • deferral or vesting of incentive payments;
  • review and report to the Board on the financial performance of CUA against the variable short and long term incentive scheme targets and KPIs which have been approved by the Board following recommendation by the Committee under paragraph 4.5;
  • in addition to meeting the requirements of paragraph 4.1, review and make recommendations on other major company policies, standards and initiatives associated with the management and development of CUA employees, including CUA's Human Resources Policy and workplace health and safety policies;
  • consider and make recommendations on the impact of any proposed major structural changes that may affect CUA employees;
  • review and make recommendations on enterprise agreements or like documents in relation to remuneration and conditions of employment;
  • facilitate and recommend the appointment, terms of engagement and proposed termination payments/arrangement of the CEO;
  • approve the appointment of the CEO's direct reports, terms of appointment and any proposed termination payments;
  • review reports and make recommendations on occupational health and safety issues affecting the CUA Group;
  • review and make recommendations on the annual employee engagement results and monitor actions required by the Board;
  • review and make recommendations on the remuneration framework for non-executive directors in accordance with the requirements of CUA's Constitution;
  • review and make recommendations on succession planning for the CEO and other members of senior management;
  • oversee and review the annual fit and proper assessment of directors and senior managers under CUA's Fit and Proper Policy;
  • oversee and make recommendations as to the fit and proper assessment of prospective Board appointed directors under CUA's Fit and Proper Policy; and
  • make recommendations with respect to the Board's endorsement of candidates seeking appointment to the CUA Board, where appropriate.

The committee is required to have at least three or more CUA Directors as members. A majority of members must be independent and at least one of the members should also be a member of the Board Risk Committee.

The committee meets at least four times per year or more frequently as required.

Board Audit Committee

The Board Audit Committee is established by the Board of Directors of CUA to assist the Board in:

  • reviewing the effectiveness of the CUA Group financial reporting and professional accounting requirements and approving CUA's annual financial statements;
  • overseeing the internal and external audit function; and
  • monitoring compliance with statutory reporting, other legislative requirements (including APRA & ASIC) and internal company policy.

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 Committee shall be an independent, non-executive director who is not the Chair of CUA or CUAFP. To ensure appropriate oversight between the BAC and the Board Risk Committee, the Chair of the BAC shall be a member of the Board Risk Committee. The Chair of the CUA Board or the CUAFP 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 Committee meets at least four times per year, or more frequently as required.

Board Risk Committee

The Board Risk Committee (the Committee or BRC) is established by the Board of Directors of Credit Union Australia Ltd (CUA) to assist the Board in:

  • advising the Board on the overall current and future risk appetite and risk management strategy;
  • overseeing and monitoring the management and alignment of current and future risks across the CUA Group relative to our risk appetite and capital management;
  • ensuring that CUA meets prudential and statutory requirements, in relation to the management of risk;
  • ensuring that CUA has in place a risk management strategy, framework and management practices which limit the Group's' risks to prudent levels;
  • oversight of the appointment and removal of the Chief Risk Officer (CRO), and reviewing the performance and setting the objectives of the CRO; and
  • providing an objective view on the effectiveness of, and assurance over, the internal control environment (including the risk management framework and financial and statutory reporting controls) of the CUA Group.

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 Committee shall be an independent, non-executive director who is not the Chair of CUA or CUAFP. To ensure appropriate oversight between the BRC and the Board Audit Committee, the Chair of the BRC shall be a member of the Board Audit Committee.

This committee also acts as the risk committee for CUAFP. CHL and CCI each have their own board audit and risk committee.

The Committee meets at least four times per year, or more frequently as required.

Board Strategy Consultative Committee

The Board Strategy Consultative Committee (the Committee or BSCC) is established by the Board of Directors of Credit Union Australia Ltd (CUA) to assist the Board and support management in the progression of major strategic issues and opportunities.
The Committee shall assist the Board in progressing CUA's strategic issues and opportunities. To do this the Committee shall:

  • Provide support and advice to Management in the progression of strategic objectives and initiatives that are consistent with the CUA Business Plan as approved or varied by the Board or that may need to be considered for commercial and strategic enhancement of CUA;
  • As necessary assess and make recommendations to the CUA Board regarding any strategic issue and in respect of any major proposals from third parties relating to the operations of and/or future ownership of CUA;
  • Approve the appointment of and scope of work undertaken by specialised advisors or experts as required by the Committee in support of strategic engagements.
  • Ensure appropriate advice is made available to all Directors of the CUA Board in respect of strategic matters including where appropriate from external advisors always subject to management of conflicts of interest and any regulatory and legal constraints.

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 committee meets as and when the need arises.

Board Nucleus Committee

The Board Nucleus Committee was established in May 2012 as a special purpose committee 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 in its current form is currently being reviewed. 

Controlled entities

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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