201512 72-2015 Board and Director Fit and Proper Policy and Director Fit and Proper Policy Page 2 CUA Group June 2016 3.0 Change Policy name to Board and Director Fit and Proper Policy

Document Title <Version Date>

Board and Director Fit and Proper

Policy

Version: 3.0 - Final

Date: June 2016

Board and Director Fit and Proper Policy

Page 1

Document control

This document

The purpose of this Policy is to document the board succession and renewal framework and the

requirements for assessing the performance and fitness and propriety of the various Boards of

the entities forming the Credit Union Australia Limited (CUA) Group.

Contact for enquiries and proposed changes

If you have any questions regarding this document please contact:

Name: Nicole Pedwell

Role: Company Secretary

Phone: (07) 3552 4313

Email: [email protected]

Document history

CUA Group

Entity Approval Date Rev No.

Summary of Changes Policy Author

Commencement

Date

CUA Group February 2012 0.0 CUA Board approved L. Swenson

CUA Group March 2014 1.0 CUA Board approved S. Groth

CUA Group December 2015 2.0 Policy style and

format updated and

minor grammatical

amendments made.

Annual Board and

Director Assessment

Policy has been

combined with Board

Succession Policy.

The Fit and Property

Policy as it pertains

to directors has been

incorporated in this

Policy.

The Directors

Retirement Policy has

been incorporated

into this Policy.

Review frequency

changed to biennial.

N Pedwell December 2015


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CUA Group June 2016 3.0 Change Policy name

to Board and

Director Fit and

Proper Policy to align

to Constitution.

D Copland June 2016

Document location

S:\company secretary\Governance - FOR USE BY CO SEC ONLY\Policies + Standards\Policies

References - Legislation

This section lists all of the Legislation that relate to this Policy.

Legislation

Not Applicable

References – Prudential Standards

This section lists all of the Prudential Standards that relate to this Policy.

Prudential Standards

APRA Prudential Standard CPS 510 - Governance

APRA Prudential Standard HPS 510 - Governance

APRA Prudential Standard CPS 520 - Fit and Proper

References – Policies and Standards

This section lists all of the CUA Policies and Standards that relate to this Policy.

Policies and Standards

Fit and Proper Policy (Senior Managers)

References – Guidelines/Procedures

This section lists all of the CUA Guidelines/Procedures that relate to this Policy.

Guidelines/Procedures

Not Applicable


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Table of contents 1 Purpose ............................................................................................. 5

2 Scope ................................................................................................. 5

3 Exceptions ......................................................................................... 5

4 Policy Approvers / Frequency of Review ......................................... 5

4.1 Approvers ..................................................................................................................... 5

4.2 Review .......................................................................................................................... 5

5 Policy Owner ..................................................................................... 5

6 Distribution ....................................................................................... 6

7 Policy Statements ............................................................................. 6

7.1 Succession and Renewal ................................................................................................ 6

7.1.1 Policy Objectives and Responsibilities ........................................................................ 6

7.1.2 Age ............................................................................................................................ 6

7.1.3 Continuity and Length of Service ................................................................................ 6

7.1.4 Succession Planning ................................................................................................... 7

7.1.5 Director Recruitment and Selection ............................................................................ 7

7.1.6 Director’s standing for Re-Election under CUA’s Constitution (CUA only) ................... 8

7.2 Board and Director Assessment ..................................................................................... 8

7.2.1 Policy Objectives and Responsibilities ........................................................................ 8

7.2.2 Assessment Process ................................................................................................... 8

7.3 Director Fit and Proper Assessments ............................................................................. 9

7.3.1 Criteria for assessment of fitness and propriety .......................................................... 9

7.3.2 Process for assessing fitness and propriety ............................................................... 10

7.3.3 Interim appointments of Directors ........................................................................... 10

7.3.4 Disclosure, Document Retention and Whistleblowing .............................................. 10

7.3.5 Dealing with persons who are not Fit and Proper ..................................................... 11

7.3.6 Dealings with APRA .................................................................................................. 11

7.3.7 Collecting Personal Information about candidates and Directors .............................. 11

7.3.8 Responsibility Matrix ................................................................................................ 12

7.4 Director Retirement Benefits ....................................................................................... 12

8 Policy Compliance Measures .......................................................... 13

9 Terms and Definitions .................................................................... 13


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Appendix 1 – Responsibility Matrix ..................................................... 14

Appendix 2 – Target Board Skills for Directors .................................. 18

Appendix 3 – CUA Group Entity Director Annual Fit and Proper Assessment ........................................................................................... 19


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1 Purpose Good corporate governance and prudential standards require a policy on board succession and

renewal. The purpose of this Policy is to document the CUA Group’s board succession, renewal

and assessment framework.

This Policy also documents the requirements for assessing:

� the performance of the Boards of each CUA Group Company relative to their objectives;

� the performance of each individual director on those Boards; and

� the fitness and propriety of each individual director on those Boards.

This Policy complies with the requirements set out in APRA Prudential Standards CPS 510 –

Governance, HPS 510 – Governance and CPS 520 - Fit and Proper.

2 Scope This Policy is a CUA Group Policy and is intended to cover each CUA Group Company.

3 Exceptions There are no exceptions with compliance to this Policy.

4 Policy Approvers / Frequency of Review

4.1 Approvers

Legislative/Regulator requirement for Board approval of this Policy: Yes: ☒ No: ☐.

The CUA Group Board will approve this Policy on behalf of each CUA Group Company to the

extent that it is applicable to them.

4.2 Review

Legislative/Regulator stipulated review period for this Policy: Yes: ☐ No: ☒.

This Policy will be reviewed at least biennially or as required subject to legislative or regulatory

requirements, in order to ensure:

� currency, relevance and accuracy; and

� it continues to meet the needs, strategic imperatives and cultural alignment intentions of the

CUA Group.

This Policy must meet the mandatory requirements as prescribed in APRA’s Prudential Standards

and each review will have reference to the checklist of mandatory requirements contained in CPS

520.

5 Policy Owner The owners of this Policy are the CUA Board along with the Company Secretary.


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6 Distribution This Policy will be made available to all directors and members of the Boards of each CUA Group

Company.

Once formally approved or amended, formal notification of the same will be sent to all directors

and members of those Boards.

7 Policy Statements

7.1 Succession and Renewal

7.1.1 Policy Objectives and Responsibilities

The respective Boards of each CUA Group Company will ensure that, at least annually (or more

regularly if required), they will consider and review Board succession and renewal and the relevant

company’s compliance with this Policy.

The Chair of each Board of each CUA Group Company shall be responsible for co-ordinating and

overseeing the aforesaid review.

The objectives of this Policy are to ensure that the respective Boards of each CUA Group Company

continue to:

� provide relevant and strong leadership;

� renew themselves so as to ensure that they remain open to new ideas and independent

thinking, whilst at the same time retaining adequate expertise;

� give due consideration as to whether directors have served on the Board in question for a

period that could, or could reasonably be perceived to, materially interfere with their ability

to act in the best interests of the company;

� perform at the optimal level;

� remain committed to ongoing director education and development; and

� comply with CPS 510 Governance and HPS 510 Governance as appropriate.

7.1.2 Age

The age of an individual director will not prevent a director from continuing in the role, provided

he/she can perform their duties as a director to the standard expected by the Board in question.

7.1.3 Continuity and Length of Service

The CUA Group’s preferred approach is to blend the need for continuity in Board membership

with regular infusions of new skills and experience.

The Group’s non-executive and executive directors will, provided they are re-elected/re-

appointed (and in the case of executive directors provided they remain employed), and to the

extent possible, serve between seven (7) to nine (9) years continuously. After the agreed period

of continuous service, non-executive and executive directors are required to stand down for a

period of at least 6 years before being eligible to stand for re-election to a CUA Group Board.


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7.1.4 Succession Planning

The Boards of CUA Group Companies are responsible for ensuring that there is a balance of skills

and experience on those Boards that is commensurate with the growing complexity of the

Group’s business.

The CUA Group’s preferred approach is to actively manage Board succession in accordance with

this Policy, relevant procedures and standards and to satisfy the needs of the CUA Group and its

Boards from time to time.

Succession planning will be reviewed annually and is a corollary to the annual Board and Director

performance assessment process (found in Part 7.2 of this Policy). The Boards of CUA Group

Companies are responsible for making recommendations as to who membership of the Board

ought to comprise of.

The Chair of each respective Board will submit to the relevant Board, after discussion with each

non-executive director, the current expectation for a retirement date for the director in question,

in accordance with this Policy. It is expected that the Board and individual non-executive

directors will confirm 12 months ahead of the retirement date for an individual.

The CUA Group CEO will submit to the relevant Board, after discussion with each executive

director, the current expectation for a retirement date for the director in question, in accordance

with this Policy. It is expected that the CUA Group CEO and individual executive directors will

confirm 12 months ahead of the retirement date for an individual.

The BREM is responsible for instituting any and all actions necessary to replace a retiring director

in accordance with the current needs of the CUA Group and the Fit and Proper Criteria outlined

in the Board and Director Fit and Proper Policy (whilst also considering the Target Board Skills,

as relevant).

7.1.5 Director Recruitment and Selection

The CUA Group comprises CUA, CHL, CCI, CUAFP and CCF. CUA is the sole member and

shareholder of CHL and CCF and is the ultimate member and shareholder of CCI and CUAFP. As

such, CUA determines the composition of the Boards of each CUA Group Company.

The following approach to the recruitment of directors may be adopted by the Board of CUA to

ensure the Group obtains a broad cross section of appropriately skilled candidates:

� Advertising – depending on the amount of notice available the Chair will, through CUA’s

member communications, seek expressions of interest from Members who believe they have

the skills, experience and capacity necessary to be a director of CUA, in accordance with the

current Fit and Proper Criteria.

� Interested members are eligible to seek election to the Board of CUA only through the annual

election process provided that they first satisfy the Fit and Proper Criteria outlined in the

Board and Director Fit and Proper Policy (including the Target Board Skills, where relevant).

Candidates who may satisfy the initial Fit and Proper Criteria will be interviewed in accordance

with the processes for selection under the Board and Director Fit and Proper Policy and the

final determination will be made in respect of the eligibility to stand by the BRem. If they are

successful in being able to stand for election under the election process then Part 7.1.6 of this

Policy will apply.

� External Recruitment – Undertake an external search for suitable candidates using a specialist

consultant.


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The BRem will co-ordinate the recruitment and selection processes, including the selection of the

specialist consultant, and will make recommendations to the CUA Board on the preferred

candidate/s. The CUA Board must ensure that the preferred candidate/s is/are fit and proper (as

applicable) under the Board and Director Fit and Proper Policy and the prudential standards and

possess the required competencies outlined under the Board and Director Fit and Proper Policy

and in the Target Board Skills.

7.1.6 Director’s standing for Re-Election under CUA’s Constitution (CUA only)

If a director indicates that they wish to stand for re-election, and are eligible in accordance with

Part 7.2 of this Policy, at the end of their term, the CUA Board, through the BRem, will formally

determine if they will support that director’s re-election and in doing so will communicate to

Members that:

� the director’s performance continues to be effective;

� the director is independent; and

� the director remains committed to the role.

In addition to the requirements under CUA’s Constitution for the BRem to determine that a

director seeking re-election or a candidate standing for election is fit and proper, the BRem will

make recommendations to CUA’s Board on whether it should support a retiring director’s re-

election and/or a candidate standing for election.

7.2 Board and Director Assessment

7.2.1 Policy Objectives and Responsibilities

The Boards of each CUA Group Company will ensure that, at least annually, Board Assessments

and Director Assessments are conducted.

The Chair of each Board of each CUA Group Company shall be responsible for co-ordinating and

overseeing the assessment process.

The objective of a Board Assessment will be to identify and collate the directors’ views on those

areas of performance or governance which may require an increased level of attention by the

relevant Board.

The objective of the peer-evaluation Director Assessments will be to improve Board performance

by identifying key areas of skill and experience of individual directors which may need to be

strengthened or developed. Director Assessments will take into account directors’ compliance

with the respective ‘Directors’ Code of Conduct’ found in the Board Charters for each CUA Group

Company.

Should any CUA Group Company have a management Board, the peer-evaluation Director

Assessments will be included as part of the annual performance review to be conducted by the

CUA Group CEO.

7.2.2 Assessment Process

In advance of any assessment being undertaken pursuant to this Policy, the relevant Board (and

in the case of a CUA Group Company that has a management Board, the CUA Group CEO) shall

identify and agree appropriate criteria to be used for the assessments for both the Board and

individual director in question.


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A process for:

� identifying the appropriate assessment criteria and adopting an agreed grading system;

� undertaking formal assessments; and

� communicating the assessment results and recommending improvements,

shall be agreed by the relevant Board prior to any assessments being undertaken pursuant to

this Policy.

The assessment process shall be properly documented by the Chair of the relevant Board and

the results treated confidentially. The results of any Board Assessment will be aggregated and

presented to the relevant Board without identifying individual directors.

Individual Director Assessments will be discussed between the Chair and the director concerned

(and in the case of a CUA Group Company that has a management Board, between the CUA

Group CEO and the directors concerned). Peer assessments may be undertaken where agreed

by the relevant Board.

The relevant Board may elect to use an external consultant during any stage of the assessment

process.

7.3 Director Fit and Proper Assessments

This Part applies to all Directors who are Responsible Persons (as determined in accordance with

the definition of “Responsible Person” in CPS 520).

This Part is to be read in conjunction with the CUA Group Fit and Proper (Senior Managers) Policy

(where relevant).

7.3.1 Criteria for assessment of fitness and propriety

All Directors of the CUA Group must be, and must remain, fit and proper.

Part 7.3 of this Policy, and in line with CPS 520, provides that, in addition to satisfying any

additional criteria as determined by the CUA Board from time to time, the criteria for determining

whether a person is fit and proper to hold a Responsible Person position are:

� It would be prudent for CUA to conclude that the person possesses the competence,

character, diligence, honesty, integrity and judgment to properly perform the Responsible

Person position;

� The person is not disqualified from holding the position; and

� The person:

� Has no conflict of interest in performing the duties of the position; or

� If the person has a conflict, it would be prudent for CUA to conclude that the conflict will

not create a material risk that the person will fail to properly perform the duties of the

position.

Appendix 1 of this Policy contains the detailed processes and protocols for assessment of each

of CUA Group’s Directors, including assessment criteria and the competencies required for that

Directorship. The competence of candidates for, and persons currently holding, Directorships

with the CUA Group is assessed by reference to the competencies for the position and the

relevant position description.


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Appendix 2 of this Policy sets out the Target Board Skills for Directors, being the list of skills from

which all Board nominees must have demonstrable and substantive expertise in at least one area.

7.3.2 Process for assessing fitness and propriety

CUA Group undertakes fit and proper assessments of all candidates for its Directorships.

APRA’s Prudential Standards and this Policy require documentation of the processes to be

undertaken in assessing whether a person is fit and proper for a Directorship (fit and proper

assessments) and must include details of:

� Who will conduct the fit and proper assessments. In the case of Independent Directors, it will

usually be the BREM at request of Board. In the case of Senior Managers who hold Executive

Director positions (including interim appointments), it will be the CEO and General Manager

– Human Resources with the BREM overseeing the assessment conducted by them;

� What information will be obtained by CUA and how it will be obtained;

� The matters that will be considered before determining if a person is fit and proper for a

Directorship; and

� The decision-making processes that will be followed.

The assessment of a person’s fitness and propriety to be a Director must generally be conducted

prior to a person’s appointment. The exceptions are:

� Directors elected by resolution of the members of CUA;

� APRA notification that a person is deemed to be a Director; and

� Where a position has changed and is subsequently deemed a Directorship.

In such cases, APRA’s Prudential Standards and this Policy require that a fit and proper

assessment be completed within 28 days of the person becoming the holder of the Directorship.

All Directors of the CUA Group are required to annually attest that they remain fit and proper

and every three years (or when up for appointment at an AGM) undergo a full fit and proper

assessment.

7.3.3 Interim appointments of Directors

A CUA Group entity may also make interim Directorship appointments.

Where it is necessary to make such an interim appointment, please refer to Appendix 1 for the

procedure to be followed.

7.3.4 Disclosure, Document Retention and Whistleblowing

The CUA Group is committed to encouraging any person who has information that may be

relevant to the fitness and propriety of any Director to make that information available to the

CUA Group. This includes disclosure of any information which they believe is relevant to the

fitness and propriety of any such Director.

In the first instance the information should be provided to the Company Secretary who will liaise

with the CEO and the appropriate director. If the information relates to the CUA Group Chair,

then the information should be provided to the Chair of the Board Audit Committee. If the

information relates to any other director then the information should be provided to the CUA

Group Chair or any other director not the subject of the complaint.


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This Policy specifically permits disclosure to APRA and other regulators of any information

required to be disclosed under CPS 520.

All information, consents, checks and assessments in relation to current, and recently past,

Directors will be retained in the company registers maintained by the Company Secretary.

No policy, procedure, term or condition or agreement is permitted which attempts to constrain,

impede, restrict or discourage any disclosures or the provision of any documents to APRA or

other regulator.

The provisions of CUA’s Whistleblower Protection Program specifically apply to any officer who

makes a report to APRA or other regulator as detailed above.

7.3.5 Dealing with persons who are not Fit and Proper

Where CUA or a CUA Group entity has assessed that a person is not fit and proper, or a

reasonable person in such a position would make that assessment, CUA or the relevant CUA

Group entity will take all steps it reasonably can to ensure that:

� Such person is not appointed; or

� For an existing Director, does not continue to hold the position.

Where a Director has been assessed as not being fit and proper, APRA must be notified within

10 business days of such assessment. If the person remains a Director, the notification must also

state the reason for this and the remedial action that is being taken.

Appendix 1 of this Policy sets out the detailed processes for dealing with Directors who may be

determined to be not fit and proper to hold such a position.

7.3.6 Dealings with APRA

Subject to Part 7.3 of this Policy, the CUA Group will notify APRA of the appointment of all

Directors within the CUA Group, together with all Relevant Information, within 28 days of their

appointment. Any changes to the Relevant Information of a Director will be notified to APRA

within 28 days of such change.

CUA will provide a copy of this Policy to APRA upon request and give all information and

notifications to APRA in the prescribed format where required. Upon request by APRA, CUA will

take all reasonable steps to provide information and documentation to assist APRA in assessing

the fitness and propriety of a person.

In this Part, “Relevant Information” means the person’s full name, date of birth (for identification

purposes only), position and main responsibilities and a statement of whether the person has

been assessed under this Policy.

7.3.7 Collecting Personal Information about candidates and Directors

In carrying out a fit and proper assessment, the CUA Group may, and frequently will, require

candidates for Directorships and existing Directors of CUA Group to provide personal information

including “sensitive information”, within the meaning of the Privacy Act 1988 (Cth) (Privacy Act).

The CUA Group will make all reasonable enquiries necessary to obtain personal information,

including sensitive information, where it believes such information may be relevant to an

assessment of whether a person is fit and proper to hold a Directorship.


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Acting prudently, the CUA Group is committed to obtaining such personal information as it may

reasonably require in order to be able to properly assess the fitness and propriety of candidates

for Directorships and its existing Directors, pursuant to APRA’s Prudential Standards and this

Policy.

The CUA Group must also ensure that all personal information collected, held and stored by it is

used and will only be disclosed in accordance with the requirements of the Privacy Act, this Policy

and CUA’s Privacy Policy. Without seeking to limit this general commitment, the CUA Group

must ensure that persons to whom the information applies may, in accordance with the Privacy

Act, gain access to the information by contacting the CUA Group.

If the CUA Group does collect and hold personal information (including sensitive information), it

will collect, hold and use the personal information (including sensitive information) to:

� Assess a person’s fitness and propriety;

� Comply with legislative and regulatory requirements;

� Perform administrative functions including risk management, record keeping, archiving, staff

training; and

� Manage CUA Group’s rights and obligations under its licences.

Any personal information (including sensitive information) collected by the CUA Group for the

purposes of a fit and proper assessment will be disclosed as required under this Policy, CUA’s

Privacy Policy, APRA’s Prudential Standards and the law.

7.3.8 Responsibility Matrix

To ensure compliance with Part 7.3 of this Policy, the minimum standards set out in the

Responsibilities Matrix at Appendix 1 to this Policy must be met.

7.4 Director Retirement Benefits

Upon the retirement or resignation of a non-executive director of CUA a lump sum retirement

benefit equivalent to the director’s average annual board fee for the previous three (3) year

period (the Retirement Benefit) shall be paid to the director, subject to:

� the director having served a minimum period of six (6) years on the CUA Board; or

� the director having served an uninterrupted minimum period of six (6) years on the CUA

Board and the board of an entity that has previously merged with CUA; and

� the director providing a written undertaking that he/she will repay the Retirement Benefit to

CUA if:

� they seek re-election to the Board of CUA within six (6) years of the date of their

retirement/resignation from the CUA Board; or

� unless otherwise approved by the Board of CUA, they seek election to the board of

another credit union or ADI within twelve (12) months of the date of their

retirement/resignation as a director of CUA.

Prior to the payment of a retirement benefit, the Chairman of the CUA Board (or where the

Retirement Benefit concerns the Chairman of the CUA Board, then the Chair of the Board Audit

Committee), must provide written authorisation that such payment should be made and that

the requirements of this Part have been met.


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8 Policy Compliance Measures As regards Board succession, renewal and assessment, the CUA Group has a limited appetite for

minor deviations from this Policy should circumstances absolutely require it.

As regards the assessment of fitness and propriety of Directors, compliance with this Policy is

mandatory and will be measured in accordance with the methods prescribed in the Board and

Director Fit and Proper Policy.

9 Terms and Definitions Capitalised terms used in this Policy which are not otherwise defined below have the meanings

given to them in the CUA Glossary of Terms and Definitions.

The following terms contained in this Policy are defined as follows:

BARC means the Board Audit and Risk Committee of a CUA Group entity.

Board means the Boards of CUA, CHL, CCI and CCF or the management Board of CUAFP, as the

case may be.

Board Assessment means the assessment of the Board’s performance (including the

performance of any Board Committees) relative to its objectives.

BREM means the CUA Board Remuneration Committee.

CCF means Credicorp Finance Pty Ltd.

CCI means Credicorp Insurance Pty Ltd.

CHL means CUA Health Limited.

CUA means Credit Union Australia Limited.

CUAFP means CUA Financial Planning Pty Ltd.

CUA Group or CUA Group Company means CUA, CHL, CCI, CUAFP or CCF as the context

requires.

Director Assessment means the individual assessment of the directors’ performance.

Directors means all Executive and Non-Executive Directors of a CUA Group entity.

Responsible Person has the meaning given to it in CPS 520 and for the purposes of this Policy

means Directors of a CUA Group entity only.

Target Board Skills means the target board skills identified in Appendix 2.


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Appendix 1 – Responsibility Matrix

Requirements Responsibility

A. Criteria and Process for assessment of fitness and propriety – Directors – CUA and other

CUA Group entities

1) Required Competencies

a) Each Director and/or candidate for the position of director is expected to have the

necessary board skills, knowledge and experience to govern the CUA Group both now and

in the future. They must have at least one of the following core competencies that are

relevant to the core competencies that should be represented on the Board as a whole:

i) strategic expertise;

ii) financial literacy;

iii) risk and legal skill – compliance with numerous laws, managing areas of major risk to

the organisation;

iv) managing people and achieving change;

v) experience with financial markets;

vi) experience with major technology projects;

vii) retail banking experience (or experience in similar organisations or industries); or

viii) expertise in an area that the Board considers to be strategically important for the CUA

Group.

b) In addition to the above competencies a Director and/or candidate for the position of

Director is expected to have the following:

i) an understanding of the CUA Group as a mutual business;

ii) an understanding of the regulatory environment within which the CUA Group

operates;

iii) an understanding of the financial statements and associated reporting having regard

to the nature of the CUA Group business;

iv) an understanding of the roles and responsibilities of a Director; and

v) the attributes necessary to work collaboratively and constructively with the Board.

c) Candidates must have demonstrable and substantive expertise at an executive or board

level in at least one of the areas specified in the Target Board Skills for Directors at

Appendix 2.

2) Fitness and Propriety Criteria

a) Each Director and/or candidate for the position of Director is required to meet all of the

following criteria:

i) Must have the appropriate competencies and skills as detailed in section A. 1 above;

ii) Must possess the required character, diligence, honesty, integrity and judgment to

properly perform the duties of a CUA Group Director;

iii) Must not be disqualified from acting as a director of CUA under any legislation,

regulation or standard;

iv) Must not have any conflict of interest which limits their capacity to be actively involved

in Board meetings or which creates a material risk that the director might fail to

properly perform their duties;

v) Must be able to spend time to fully prepare for, travel to and attend Board, Board

committee and subsidiary meetings as required by CUA; and

vi) Must not have a material relationship with an entity seeking to acquire an interest in

CUA.

BREM


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b) In addition, directors seeking re-election must meet the following criteria:

i) Must not have materially breached any of the following:

(1) Technology Acceptable Use Standard;

(2) Anti-discrimination Standard and the Bullying and Harassment Standard;

(3) Workplace Health and Safety Standard; and

ii) Must not have materially breached the Director’s Code of Conduct as detailed in the

relevant CUA Group entity Board Charter.

3) Fitness and Propriety Assessment – Election/Re-election as a Director – CUA (only)

a) The CUA Board as prescribed by the Constitution has the sole responsibility for

determining the fitness and propriety of persons who are seeking election/re-election as

a Director under the CUA Constitution. The Board at its sole discretion may itself

undertake the assessment of fitness and propriety or alternatively request the BREM or

another CUA Group entity Board committee to undertake the assessment on its behalf.

b) The fitness and propriety criteria referred to in section A. 2 above applies equally, to the

extent possible, to all persons seeking election/re-election as a Director of CUA.

c) Where an existing Director is seeking re-election, the CUA Board will have access to the

fitness and propriety assessments for the individual Director.

d) In the event that a person does not provide the information required under the CUA

Constitution then the CUA Board may determine that the person does not meet the fitness

propriety criteria. In the event that the Board requests the BREM or another CUA Group

entity Board committee to undertake an assessment and they find that the person does

not meet the criteria then the Board will not appoint the person as a Director

e) On receipt of all information and consents and completion of the relevant Questionnaire

and Declaration, the General Manager - Human Resources will undertake the standard

enquiries and checks (including the frequency of the National Police Check). The General

Manager - Human Resources will have regard to the Checklist for CUA Group fit and

proper assessments as detailed in the Board and Directors Fit and Proper Policy.

f) The Board will determine the process it will undertake to complete the assessments of

individuals seeking election/re-election as a Director, provided the process does not

conflict with any aspect of its Constitution.

g) In the event of a person being assessed as not meeting the fitness and propriety criteria,

the Board will initially provide the person with a verbal assessment and an opportunity to

provide additional information and comments to the Board. The Board will then consider

and take into account any additional information and comments provided by the nominee

before issuing its final assessment.

4) Fitness and Propriety Assessment – Existing Directors – all CUA Group entities

a) Annually each Director will undertake a self-assessment against the criteria contained

within section A. 2 above (see the template Questionnaire and Declaration).

b) Where a Director has conducted a self-assessment and believes they meet the criteria they

should provide details of their assessment together with a declaration to the Company

Secretary to the effect that they have assessed themselves as meeting the criteria.

c) If at any time a Director believes they do not meet the criteria they should seek advice

from the Chair and if appropriate, the Company Secretary to determine if the matter can

be remedied. If remediation cannot be achieved then the Director is obliged to resign.

d) As part of the annual assessment process Directors may raise any issues or concerns they

may have about the fitness and propriety of other Directors.

e) The Company Secretary must report any exceptions to the chair.

f) The BREM will co-ordinate the annual fit and proper assessment review of individual

Directors and report the outcome of these assessments to the Board of Directors.

5) Existing Directors – Assessment Exceptions – Phase 1

Subject always to the provisions of this Policy:

a) the BREM will assess the severity of any exceptions;


Page 16

b) where the exception is related to competencies, the BREM will recommend a development

program to update and enhance the skills of the individual Director;

c) other than because of disqualification, where the exception is due to any other reason, the

BREM will assess whether remediation is possible;

d) the Chair must then meet with the Director to discuss the assessment exceptions and

where applicable should agree with the Director the development program and the time

frame for re-assessment;

e) where the exception is not related to competency/skills or disqualification, the chair should

convey what remediation is required and a time frame for re-assessment; and

f) where no remediation is considered possible the Chair should recommend that the

Director consider resigning.

6) Existing Directors – Assessment Exceptions – After Development Program

g) Following the completion of the development program the Director should undertake a

self-assessment as per section A. 2(a) above.

h) The Chair should then review the self-assessment and seek input from the other Directors

where considered appropriate.

i) The Chair should meet with the Director to discuss the assessment.

j) Where the Chair believes that the Director still does not meet the criteria then the

assessment should be referred to the BREM or relevant Committee which may recommend

that the Director consider resigning and advise the Board accordingly.

7) Unsatisfactory Assessment – Director Does Not Resign

k) Where the Chair has recommended that a Director consider resigning and the Director

decides not to resign, the Chair will request the Board to review the fitness and propriety

assessment and in doing so must make available all relevant documentation.

l) Where the Board reviews the findings and confirms the unsatisfactory assessment, a report

will be prepared by the Chair and circulated to all Directors with a request that the matter

be discussed at an “in camera” session of the Board.

m) The Board at their “in camera” session will discuss the report from the Chair and seek a

response from the Director concerned.

n) Provided the Chair’s report is supported by 75% of the Directors, the Director will be

requested to resign.

o) Where a resignation is not tendered the Board will consider the options available to it,

including seeking regulatory assistance to remove the Director.

B. Interim Appointments of Responsible Persons

Interim appointments to a Responsible Person position may be made by the CUA Group without

a full fit and proper assessment being undertaken for a period of up to 90 days (or longer with

APRA’s agreement) including any prior period of interim appointment.

In circumstances where the CUA Group needs to make interim appointments of persons to a

Directorial position the following will apply:

a) The CUA Group will do nothing further, prior to the interim appointment, if the person has

already been assessed as fit and proper for another Directorship within CUA Group.

A person appointed to a Directorship of the CUA Group on an interim basis may subsequently be

confirmed in that position if, following a full assessment in accordance with this Appendix and

completion of all enquiries, the person is found to be fit and proper for the particular Directorship.

BREM


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C. Dealing with persons who are Not Fit and Proper

CUA Group will take all prudent steps to ensure that:

a) A person who is not fit and proper for a Directorship, is not appointed to that position;

and

b) A person occupying a Directorship does not continue to hold that position if subsequently

found not to be fit and proper for that position.

Directors

Subject to the processes outlined in section A5 above in this Appendix, in relation to the removal

of Directors, a CUA Group entities’ ability to take action following a finding that a director is not

fit and proper is limited by the Corporations Act 2001 (Cth) and its Constitution.

Accordingly, wherever a CUA Group entity forms the belief that a director is not fit and proper,

notification will be provided by the Company Secretary to APRA within 10 business days of forming

the belief, the basis of the belief and whether there is a need for a direction by APRA under the

Banking Act 1959 (Cth) to enable CUA Group to promptly remove the director.

BREM / Co Sec


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Appendix 2 – Target Board Skills for Directors

All nominees for Board election or appointment must have demonstrable and substantive expertise

in at least one area.

Post the Global Financial Crisis, there has been, and continues to be, an increasing amount of

complex regulation and scrutiny by CUA Group’s regulators. There is also a recognition by the Board

that the best interests of members are served by building a strong, stable organisation with a

sustainable future. As a result, the Board believes it necessary to regularly update skills required of

Board members.

In accordance with the Board’s practice in respect of Board succession, this list will be reviewed

annually and updated as appropriate with effect from 1st July of that year.

SKILLS AND EXPERIENCE

1) CUA’s goal is to grow its assets substantially (at least double) over the next 3 to 5 years. Board

skills, knowledge and experience are needed not only to govern the company now, but more

importantly to help CUA achieve its future ambitions. Broadly, for a nominee to be considered fit

& proper to be a CUA Directors, they require:

a) a background that is relevant to the needs of CUA;

b) an understanding of CUA as a mutual business; and

c) an understanding of the regulatory environment within which CUA operates.

2) A nominee must have core skills that are relevant to the core skills that should be represented

on the CUA Board as a whole (not necessarily in one person). These are those items listed at Part

1. (a)(i) to 1.(a)(viii) in Appendix 1 of this Policy.

3) The skills and experience required of nominees need to be derived from recently working within

or with an ADI with assets exceeding $6 billion, or an equivalent organisation (one that has similar

characteristics to a substantial ADI, or a company equivalent to an ASX300 entity), in one or more

of the following areas:

a) qualified accountant with not less than 10 years at a senior level, in the finance function

covering financial reporting, performance management and capital management;

b) minimum 5 years as a Non-Executive Director;

c) as Chief Executive or head of a major operating division in business development, strategic

development, sales & marketing or systems implementations; or

d) more than 5 years’ experience at senior executive levels is governance, risk and compliance

activities, including experience interacting with the regulators.

4) There may also be strategic reasons why, in the case of Board appointments made under rule

13.4 of the Constitution, the CUA Board, may determine that a nominee for Board appointment

is fit & proper when that individual does not have the skills and experience described above.

The Board reserves the right to vary the list at any time according to the changing needs and

circumstances of CUA Group


Page 19

Appendix 3 – CUA Group Entity Director Annual Fit and Proper Assessment

PART 1: QUESTIONNAIRE

SECTION 1 PERSONAL INFORMATION

Full name

Current Residential address

SECTION 2 PROFESSIONAL INFORMATION

Occupation

Employer’s full name

Directorships of other corporate entities (other than in relation to CUA):

..........................................................................................................................................................................

..........................................................................................................................................................................

..........................................................................................................................................................................

SECTION 3 OTHER TRANSACTIONS

Other Transactions

Please provide details of any transaction, other than banking transactions in the normal course of business as a member, undertaken between yourself (or your relatives) and CUA, or its controlled entities in the past twelve (12) months:

...........................................................................................................................................................................

...........................................................................................................................................................................

...........................................................................................................................................................................


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SECTION 4 QUESTIONNAIRE

LICENCES, AUTHORISATION

YES

NO

1. Have you ever been refused the right, or been restricted in the right, to carry on any trade, business or profession for which an authorisation (licence, certificate, registration or other authority) is required by law?

�

�

2. Have you ever been subject to disciplinary action in relation to any such authorisation?

�

�

3. Have you ever been the subject of any investigations or proceedings that are current or pending and which may result in disciplinary action being taken in relation to any such authorisation?

�

�

4. Have you ever been engaged in the management of any companies/businesses that have had a Corporations Act 2001 (Cth) (or previous corresponding laws) licence cancelled?

�

�

PROFESSIONAL MEMBERSHIPS, ACCREDITATION AND INDEMNITY INSURANCE

YES

NO

N/A

5. Have you ever been reprimanded, or disqualified or removed, by a professional or regulatory body or external dispute resolution scheme in relation to matters relating to your honesty, integrity or business conduct?

�

�

6. Has a court, ASIC or APRA ever disqualified you from managing Corporations?

�

�

7. Have you ever had any past, present or pending claim made against a professional indemnity insurance policy in relation to advice you have tendered?

�

�

8. Have you ever been refused professional indemnity insurance?

�

�

9. Have you ever been denied accreditation by a lender, mortgage manager or mortgage insurer?

�

�

10. Have you ever had your accreditation cancelled or suspended by a lender, mortgage manager or mortgage insurer, other than for volume reasons, or had your membership of an aggregator or franchise group terminated, or a similar action pending against you?

�

�

NAMES


Page 21

11. Have you ever carried on business under any name other than the name or names previously notified to CUA?

� �

12. Have you ever been known by any name other than the name or names previously notified to CUA?

�

�

OFFENCES

13. Have you ever been the subject of administrative, civil or criminal proceedings or enforcement action, which were determined adversely against you (including by you consenting to an order or direction, or giving an undertaking not to engage in unlawful or improper conduct) in any country?

�

�

14. Have you ever been convicted of any offence involving any of the following:

If you answer YES, to any of the matters in question 14, ADDITIONAL INFORMATION (page 4) must be completed.

• Management of corporations;

• Breaches of the Corporations Act 2001 (Cth), the Corporations Law that was previously in force, or a similar law of a foreign country;

• Breaches of the Banking Act 1959 (Cth);

• An offence against the Financial Sector (Collection of Data) Act 2001 (Cth), or the Financial Sector (Shareholdings) Act 1998 (Cth);

• Fraud or Dishonesty;

• Conduct relating to a company that carries on business in the financial services sector; and/or

• Significant prison terms

�

�

�

�

�

�

�

�

�

�

�

�

�

�

SOLVENCY

If you answer YES to any of the matters in Questions 15 to 23, ADDITIONAL INFORMATION (page 4) must be completed.

15. Have you ever been declared bankrupt or insolvent under administration, or is there any such action pending?

�

�

16. Have you ever executed a deed of arrangement under Part X of the Bankruptcy Act 1966 (Cth), or a similar law of a foreign country?

�

�

17. Have your creditors ever accepted a composition under Part X of the Bankruptcy Act 1966 (Cth), or a similar law of a foreign country?

�

�


Page 22

18. Have you ever been engaged in the management of any companies/businesses that have had an external administrator appointed, or which have entered into a compromise, or scheme of arrangement, with its creditors?

� �

19. Have you ever been engaged in the management of any companies/businesses that were declared insolvent?

�

�

20. Have you ever been engaged in the management of any companies/businesses that were declared the equivalent of insolvent under the law of an external territory or country other than Australia?

�

�

21. Have you ever been disqualified under the law of a foreign country from managing, or taking part in the management of an entity that carries on the business of banking or insurance or otherwise deals in financial matters?

�

�

22. If you have been disqualified from managing a corporation, has a court given you leave, or has ASIC given you written permission, to be involved in the management of the credit union, or a class of corporation including a credit union?

�

�

�

23. Has a personal representative or trustee been appointed to administer your property on the grounds of mental incapacity?

�

�

SECTION 5 CONSENT

I confirm my consent to the following searches being undertaken in my name and I agree to provide such documentation and information that is necessary to conduct such searches:

• Bankruptcy Search

• Search of ASIC Disqualified Persons Register

• Search of APRA Disqualified Persons Register

• Criminal History Search

Signature of Director .......................................................................................... Date ..................................

For Office Use Only Signature Date

Conducted Bankruptcy Search

Searched ASIC Disqualified Persons Register

Searched APRA Disqualified Persons Register

Conducted Criminal History Search

ADDITIONAL INFORMATION

OFFENCES

If you answered YES to any of the matters in Question 14, please provide the following details:


Page 23

Court Description of conduct Date of conviction

Penalty

SOLVENCY

If you answered YES to question 22, please provide a copy of the Court order, ASIC’s written permission or APRA’s determination.

If you answered YES to any question under the section ‘Solvency’, please provide an explanation of each matter including:

• the judgement and if it has been satisfied;

• for a declaration of bankruptcy or insolvency: o date of the declaration and district in which it was made o bankruptcy number

• for a deed of arrangement, assignment or where creditors have accepted a composition under Part X of the Bankruptcy Act 1966 (Cth):

o date of the deed of arrangement, assignment or the special resolution accepting composition and the district in which it was made;

o name and address of the trustee of the deed of arrangement, assignment or of the composition; o identifying number used in relation to the deed or arrangement, assignment or the composition

in the office of the Registrar in Bankruptcy.

...........................................................................................................................................................................

...........................................................................................................................................................................

...........................................................................................................................................................................

...........................................................................................................................................................................

...........................................................................................................................................................................


Page 24

PART 2: INDEPENDENT/EXECUTIVE DIRECTOR FIT AND PROPER DECLARATION

I, DO SOLEMNLY AND SINCERELY DECLARE:

1. that I have read and understand the CUA Board and Director Fit and Proper Policy (the Policy)1, as it relates to my role as an insert of insert CUA Entity and state that I:

a. have the necessary board skills, knowledge and experience to govern insert CUA Entity both now and in the foreseeable future;

b. possess at least one of the core competencies identified in Appendix 1 of the Policy;

c. possess all of the competencies identified in Appendix 1 of the Policy;

d. have demonstrable and substantive expertise at an executive or board level in at least one of the areas specified in Appendix 1 of the Policy; and

e. in the case of Executive Directors ONLY, meet all of the management competencies required under the Policy, as defined in my job description and set out in my contract of employment and the criteria set out in Appendix 1 of the Policy;

2. that I have not been disqualified from acting as a director or manager of insert CUA Entity or its subsidiary companies under any legislation, regulation or standard;

3. that I have no ongoing conflicts of interest which limit my capacity to be actively involved in board meetings or the management of insert CUA Entity or its subsidiary companies;

4. that I have no material relationship with an entity seeking to acquire an interest in insert CUA Entity or its subsidiary companies;

5. that I am able to spend time to fully prepare for, travel to and attend Board and Board committee meetings as required by the insert CUA Entity;

6. that I have not materially breached any of the insert CUA Entity human resource policies, including those referred to in the respective Board Charters of the CUA Group entities;

7. that I have not materially breached the Director’s Code of Conduct as detailed in the respective Board Charters of the insert CUA Entity;

8. that the answers given by me in the Questionnaire forming part of this Fit and Proper Assessment and any other information that I have given in connection with the Questionnaire, are accurate as at the date of its completion;

9. that at no time in the past 12 months have I either in Australia or overseas:

a. demonstrated a lack of willingness to comply with legal obligations, regulatory requirements or professional standards, or been obstructive, misleading or untruthful in dealing with regulatory bodies or a court;

b. breached a fiduciary obligation;

c. perpetrated or participated in negligent, deceitful, or otherwise discreditable business or professional practices;

1 The CUA Board and Director Fit and Proper Policy is available on infocentral.


Page 25

d. been reprimanded, or disqualified, or removed, by a professional or regulatory body in relation to matters relating to my honesty, integrity or business conduct;

e. seriously or persistently failed to manage personal debts or financial affairs satisfactorily in circumstances where such failure caused loss to others;

f. been substantially involved in the management of a business or company which has failed, where that failure has been occasioned in part by deficiencies in that management;

g. been of bad repute in any business or financial community or any market; or

h. been the subject of civil or criminal proceedings or enforcement action, in relation to the management of an entity, or commercial or professional activities, which were determined adversely on me (including by my consenting to an order or direction, or giving an undertaking, not to engage in unlawful or improper conduct) and which reflected adversely on my competence, diligence, judgement, honesty or integrity; and

10. that I have read and understand the definition of independence contained in Annexure 1 of the insert CUA Entity Board Charter, and state that I am NOT an independent director of the insert CUA Entity due to the fact that I am insert role of insert CUA Entity and an insert role of insert CUA Entity.

Signed:

............................................................ Date: / /

............................................................

Signature of Witness

............................................................

Name of Witness (BLOCK LETTERS)

Documents

201512 72-2015 Board and Director Fit and Proper Policy and Director Fit and Proper Policy Page 2 CUA Group June 2016 3.0 Change Policy name to Board and Director Fit and Proper Policy