HESTA draws APRA's ire over massive tech replatforming project

Industry super fund HESTA has copped additional licence conditions over its handling of an outsourced provider and technology platform transition earlier this year.

The project was billed at the time as “one of the largest and most comprehensive technology projects undertaken by an Australian industry super fund”.

The switch forced HESTA offline between early April and the start of June, disrupting account access and transaction processing for 1 million members.

However, access problems persisted for some members up to a month after the switchover and long contact centre queues hampered resolution.

The powerful Australian Prudential Regulation Authority (APRA) has now placed additional conditions on HESTA’s licence to operate, citing concerns about the way the project was run.

“While some disruption is unavoidable when changing service providers, APRA expects that any transitions are well managed and do not result in any unnecessary impact on members' ability to access their accounts,” APRA deputy chair Margaret Cole said.

“APRA expects trustees to demonstrate strong governance and risk management in their oversight of critical operations and material service providers. 

“That responsibility is further heightened when a service that is critical to members is at risk.”

APRA said the HESTA project “resulted in a severe, prolonged disruption to member services and caused direct harm to members.”

HESTA is now required “to conduct separate independent reviews of its risk management framework and board effectiveness,” APRA said.

“The reviews will be comprehensive in scope and will consider HESTA’s management of the transition.”

HESTA CEO Debby Blakey said the fund “takes the matters raised by APRA very seriously and are cooperating fully with the regulator to resolve them.”

“​We apologise to members who experienced delays during our transition to a new administration provider,” Blakey said.

“The change to a new administration platform in June was made with a long-term focus on delivering better, more personalised service to our members.​

“Since the transition we have worked closely with our administration provider to seek to deliver the level of service our members expect and deserve. 

“We are committed to implementing any potential improvements identified so we can better support our members now and into the future.”