Corporate governance
The Board of Credit Union Australia Limited (CUA) is responsible for the corporate governance of CUA and its controlled entities. This statement generally describes the practices and processes adopted by CUA to ensure sound management of CUA within the legal framework under which we operate. 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. CUA is also supervised by the Australian Securities & Investments Commission (ASIC) under the Corporations Act 2001 and has been granted an Australian Financial Services Licence.
- Role of the Board
- Board processes
- Composition of the Board
- Conflict of interest
- Board performance assessment
- Independent professional advice and access to credit union information
- Member participation
- Ethics
- Risk Management
- Remuneration policies for directors
- Board Committees
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.
It is also responsible for approving and monitoring financial and other reporting.
The Board has delegated responsibility for operation and administration of the Credit Union to the Managing Director (MD) and executive management.
Board processes
The Board currently holds eleven scheduled meetings each year, plus 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 is reviewed annually.
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 is comprised of eight directors being seven elected directors and the Managing Director.
Other than the MD, the Board comprises all independent non-executive directors. In determining whether a director is independent, the Board has had regard for 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 2001 and the Credit Union’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 enhanced its annual evaluation processes of 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 their 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
Members have two relationships with the Credit Union, as a customer and as an owner/shareholder. As customers, members exercise choice through their selection of the products and services they believe best suit their individual needs. As owners/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 both 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. Our Credit Union is driven by our vision and values. The principles established here guide our behaviour and interaction with members, other credit unions, our staff and the broader community.
CUA is also committed to the privacy of member information.
CUA has in place a whistleblower protection program for the confidential reporting of issues of unacceptable or undesirable conduct.
Risk management
CUA manages a diverse range of significant risks. To this end the Board is committed to the identification and management of these risks throughout the CUA group.The Board, through the MD, has established a risk management system for assessing, monitoring and managing these risks.
The Board Audit and Risk Committee receive and review 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 comparative 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 of 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 director’s fees.
Non-executive directors may maintain loans and credit facilities from the Credit Union at normal member rates of interest and therefore no additional remuneration is obtained by way of a benefit.
A separate process to determine the appropriateness of the MD’s remuneration, including performance related incentives, is in place and is co-ordinated by the Board Executive Committee.
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 of this report are outlined below.
- Board Executive committee
- Board Audit and Risk committee
- Director Nominations committee
- Controlled entities
Board Executive committee
This committee is made up of two directors and the Managing Director, with the Company Secretary in attendance at meetings. The key responsibilities of the committee include:
- reviewing the agenda for Board meetings
- co-ordinating the operations of the Board, including planning and workshops
- co-ordinating general meetings and director elections
- initiating Board performance assessment and renewal processes
- undertaking MD performance and salary review and succession planning and
- developing and monitoring governance policies and practices
Members of the committee are Kevin Ross (Chair), Robert Powell (Deputy Chair) and Graham Olrich (MD).
The committee meets on an ‘as needs’ basis.
Board Audit and Risk committee
The committee is made up of four directors with the MD, Deputy to the Managing Director, Chief Financial Officer and Company Secretary and the external and internal auditors invited to attend meetings. The key responsibilities of the Committee include:
- overseeing our compliance with statutory and corporate requirements
- overseeing and examining the adequacy of our risk management systems
- overseeing and examining the internal and external audit processes and reports
- monitoring the adequacy of our corporate insurance cover
- approval and monitoring of the internal audit program
- reviewing the draft annual financial report and the audit report and making the necessary recommendation 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 and
- assessing whether non-audit services provided by the external auditor impact the external auditor’s independence and advising the Board accordingly
Members of the committee are Peter Dowling (Chair), Elizabeth Foster and Kate Greer. The committee currently holds five scheduled meetings a year, with additional meetings as required. 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.
Director nominations committee
This committee is a requirement under CUA’s constitution. Its role is to assess whether individual nominees possess the appropriate competencies commensurate with the roles and responsibilities of a director by 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 are the Deputy Chairman and two independent members who have extensive knowledge and experience in Board governance and financial services either as directors or managers.
Controlled entities
The activities of the subsidiaries in the CUA group are overseen by their own board of directors who are principally drawn from the main CUA Board and executive management. Directors of these companies operate within CUA’s corporate governance policy, except where the constitution of a company specifically requires otherwise.
