Corporate Governance

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.

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 the overall corporate governance of CUA, including its strategic direction, establishing and monitoring the achievement of management’s goals and ensuring the integrity of internal control and management information systems.

The Board has delegated responsibility for the operation and administration of the credit union to the Chief Executive Officer (CEO) and executive management team. It is also responsible for approving and monitoring financial and other reporting.

The role and responsibility of the CUA Board is set out in detail in CUA’s Corporate Governance Policy.

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 between six and nine and that their term of office is normally three years. Currently the Board comprises seven directors.

The Board comprises all independent non-executive directors. In determining whether a director is independent, the Board has regard to APRA’s Corporate Governance Standard. 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 the credit union. The Board has developed guidelines to assist directors in disclosing potential conflicts of interest. Directors’ disclosures are formally updated annually. Transactions between non-executive directors and the credit union 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 the credit union’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 the credit union.

Member participation

Each member has two relationships with the credit union: 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.

The credit union conducts regular member research to assist the Board and management in planning for the future of the credit union.

Ethics

To maintain member confidence in the integrity of the credit union, CUA directors have adopted and adhere to a personal code of conduct, which is based on the code developed by the Australian Institute of Company Directors.

CUA is committed to the International Credit Union Operating Principles adopted by the World Council of Credit Unions and the Code of Ethics and Duties to Stakeholders developed by the credit union movement through Abacus – Australian Mutuals. CUA 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.

Risk management

CUA manages a diverse range of significant risks. To this end, the Board is 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 Audit and 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. No other remuneration is paid. However, in the event of downsizing the Board, either by merger or otherwise as allowed under the constitution, the Board may pay a termination payment of up to three years of ordinary 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.

Board committees

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 in place at the time this statement is issued are outlined below.

Board Remuneration Committee

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 510 (APS510). The key responsibilities of the committee include:

Conducting regular reviews of, and making recommendations to, the Board on the remuneration policy, including an assessment of compliance with the requirements of APS510.
Making annual recommendations to the Board on the remuneration of the CEO.
Considering and approving recommendations in relation to remuneration for direct reports of the CEO and other persons whose activities may, in the committee’s opinion, affect the financial soundness of the institution, and any other person specified by APRA.
Considering and approving recommendations to the Board regarding remuneration of other categories of persons covered by the remuneration policy.
Having the power to engage third-party experts, if it chooses to do so, in a manner that ensures their engagement, including any advice received, is independent.
Considering and approving people-related strategies aimed at moving CUA towards being recognised as an equal-opportunity employer and an employer of choice.
Reviewing targets set and schemes designed to drive performance of CUA employees.
Endorsing enterprise agreements or similar documents relating to remuneration and conditions of employment.

In carrying out its duties, the Remuneration Committee has free and unfettered access to risk and financial control personnel and other internal and external parties.

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.

Board Audit and Risk Committee

The key purpose and responsibilities of the Audit and Risk Committee include:

Overseeing CUA’s compliance with statutory and corporate requirements.
Overseeing and examining the adequacy of CUA’s risk management systems.
Overseeing and examining CUA’s internal and external audit processes and reports.
Monitoring the adequacy of CUA’s corporate insurance cover.
Approving and monitoring CUA’s internal audit program.
Reviewing CUA’s draft annual financial report and audit report, and making necessary recommendations to the Board for approval of the annual financial report.
Making recommendations on the appointment of, and monitoring the effectiveness and independence of, the external auditor.
Assessing whether non-audit services provided by the external auditor impact the external auditor’s independence, and advising the Board accordingly.

The committee charter requires the committee to be made up of at least three non-executive directors, the majority of whom must be independent. The Chair of the CUA Board may be a member of the Audit and Risk Committee, but cannot chair the committee. CUA’s external and internal auditors and General Manager, Risk and Compliance are given notice of meetings and have the right to attend and contribute.

This committee also acts as the audit committee for the CUA subsidiaries Credicorp Insurance Pty Ltd, CUA Health Ltd and CUA Financial Planning Pty Ltd.

Board Sustainability Committee

This committee has been established to assist the Board in maintaining a sustainability focus and changing the life of CUA members for the better by:

Ensuring corporate social responsibility strategy is integrated within the annual business plan, appropriately identifying risks and opportunities.
Overseeing structures and frameworks that ensure sustainability, governance, oversight and accountability to stakeholders.
Monitoring CUA’s reporting to stakeholders on sustainability performance.
Reviewing the selection and renewal process for major corporate partners, ensuring a thorough due diligence process is completed, and monitoring performance against objectives.

The committee meets quarterly and has four members: two CUA Board directors, CUA’s General Manager, Strategy and Marketing and CUA’s Head of Corporate Affairs.

Board Strategy Consultative 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:

Providing support and advice to CUA management in progressing strategic objectives and initiatives that:
- Are consistent with the CUA Business Plan as approved or varied by the Board; or
- May need to be considered for commercial and strategic enhancement of CUA.
Assessing and making recommendations to the CUA Board, as necessary, 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.
Approving the appointment of and scope of work undertaken by specialised advisors or experts as required by the committee in support of strategic engagements.
Ensuring 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 managing 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.

Director Nominations Committee

This committee is required under CUA’s constitution. Its role is to assess all persons, including existing directors, prior to their appointment or election as a director, as to their fitness and propriety to be and act as a director. The committee has reference to the Board’s Fit and Proper Policy. This policy is a key requirement of APRA’s Fit and Proper Standard.

Members of the committee include one CUA director and two independent customers who are not directors or employees of CUA and who have the appropriate knowledge and experience to properly assess nominees for the Board.