Notice imposing conditions on a registration to carry on life insurance business in Australia – KeyInvest Ltd

Notice imposing conditions on a registration to carry on life insurance business in Australia – KeyInvest Ltd

Life Insurance Act 1995

To:  KeyInvest Ltd ABN 74 087 649 474 (the life insurer)

Since APRA issued to the life insurer a registration under section 21 of the Act to carry on life insurance business in Australia (the registration), I, Carmen Beverley-Smith, a delegate of APRA, under section 22(1)(a) of the Act, impose conditions on the registration in the manner specified in the Schedule.

This instrument, and the conditions imposed on the registration, commences on the day the instrument is made.

Dated: 1 August 2025

Carmen Beverley-Smith Executive Director

Life & Private Health Insurance & Superannuation Division

Interpretation

Act means the Life Insurance Act 1995.

APRA means the Australian Prudential Regulation Authority

Board Renewal Plan means the Board approved plan developed by KeyInvest, and approved by APRA, in compliance with Prudential Standard CPS 510 to address the deficiencies identified in the GT Report regarding KeyInvest’s Board effectiveness (pages 4 to 6, 17 to 18 of the GT Report).

Benefit Funds means the KeyInvest benefit funds in the form of Defined Contribution Capital Guaranteed and Unit Linked Funds

BFR amendments means any amendments of approved benefit fund rules.

CPS 190 means Prudential Standard – Recovery and Exit Planning as at the date of these conditions

CPS 220 means Prudential Standard – Risk Management as at the date of these conditions CPS 234 means Prudential Standard – Information Security as at the date of these conditions CPS 510 means Prudential Standard – Governance as at the date of these conditions Exposure to Private Credit means:

1.    purchasing or investing in a non-bank lender that provides or facilitates credit, or

1.    providing funds to such a business to enable it to provide or facilitate loans, including loans secured by mortgage.

Funeral Fund means the KeyInvest Funeral Bond Fund

GT Report means the final Grant Thornton independent review report of KeyInvest’s Risk

Management Framework dated 30 September 2024

Independent Assurance Assessment means the Board approved assurance assessment completed by the Independent Expert on the design, implementation and effectiveness of the Remediation Plan

Independent Expert means the independent expert appointed by KeyInvest, and approved by APRA, to conduct an assurance assessment of the implementation of the Remediation Plan in the form of an Independent Assurance Assessment

KeyInvest means KeyInvest Ltd (ABN 74 087 649 474) the APRA-regulated friendly society

Keystone means Keystone Capital Limited, Australian Financial Services Licence (Licence Number 439327)

Keystone Capital Acquisition means when the subsidiary of KeyInvest, KeyInvest Private Capital Ltd, purchased fifty (50) per cent in the shares of Keystone on 9 June 2023

Management Fund means the KeyInvest Management Fund

Remediation Plan means a Board approved plan developed by KeyInvest for the remediation of:

1.    the following deficiencies identified in the GT Report:

1.             KeyInvest’s Board effectiveness (pages 4 to 6, 17 to 18 of the GT Report),

1.             KeyInvest’s uplift in its Risk Management Framework (pages 13 to 14, 16 to 23 of the GT Report), and
2.             KeyInvest’s management of material or potential conflicts of interest and investment governance (pages 7 to 8, and 18 of the GT Report).

1.    the concerns identified by APRA including upgrading its controls for managing material or potential conflicts of interest and investment governance and uplifting its Board effectiveness as set out in APRA’s correspondence on 17 July 2024 and 13 November 2024 (Pages 8 to 11 of APRA’s Show Cause Notice) and in the GT Report (Pages 11 to 14), and

1.     the underlying root cause(s) of the following:

1.             the breaches of CPS 190 and CPS 220 notified to APRA between 4 April 2024 and 12 April 2024, and

1.           the following deficiencies identified in the GT Report:
   1.      KeyInvest’s Board effectiveness (pages 4 to 6, 17 to 18 of the GT Report),

1.      KeyInvest’s uplift in its Risk Management Framework (pages 13 to 14, 16 to 23 of the GT Report), and
2.       KeyInvest’s Management of material or potential conflicts of interest and investment governance (pages 7 to 8, and 18 of the GT Report).

Show Cause Notice means APRA show cause notice to KeyInvest dated 24 February 2025 and attached documents.

Schedule – the conditions

Remediation Plan

1.        KeyInvest must develop and design the Remediation Plan by 31 August 2025.
2.        KeyInvest must implement and embed the activities specified in the Remediation Plan within the timeframes specified in the Remediation Plan.
3.        KeyInvest must complete all the activities specified in the Remediation Plan by 30 November 2027.
4.        If it becomes apparent to KeyInvest that any of the timeframes in the Remediation Plan may not be complied with, KeyInvest must inform APRA of the following within 5 business days:
   1.       the nature and extent of the delay
   2.       the reasons for the delay, and
   3.       the steps KeyInvest is taking to rectify the delay.
5.        KeyInvest must provide progress reports against the Remediation Plan to APRA every quarter, commencing 30 September 2025.

Board Renewal Plan

1.        KeyInvest must prepare a Board Renewal Plan and provide that plan to APRA for approval by APRA by 31 August 2025.

Restrictions on investment activity

1.        Before the completion of the Independent Assurance Assessment (outlined at conditions 9 to 10 below) of the Remediation Plan or until APRA agrees otherwise, KeyInvest must not:
   1.       seek member approval for any BFR amendments to increase the percentage of the Funeral Fund that can be invested in Australian Registered First Mortgages, or
   2.       increase its Exposure to Private Credit either from its Management Fund or Benefit Funds.
2.        KeyInvest must provide a report to APRA on a quarterly basis, with the first report due on 31 August 2025, setting out details of its Exposure to Private Credit, including the dollar amount that KeyInvest has invested from:
   1.       each of the Benefit Funds, and
   2.       the Management Fund.

Independent Assurance Assessment

1.        By 30 November 2026, KeyInvest is to appoint an Independent Expert to prepare an Independent Assurance Assessment upon completion of the Remediation Plan.

1.    Within five business days of the Board approving the Independent Assurance Assessment, KeyInvest must provide a copy of the Independence Assurance Assessment to APRA.

Chair Attestation

1.    Within five business days of the Board approving the Independent Assurance Assessment, the Chair of KeyInvest must provide an attestation to APRA, confirming that the completion of the Remediation Plan:
   1.         addresses the following deficiencies identified in the GT Report:
      1.             KeyInvest’s Board effectiveness (pages 4 to 6, 17 to 18 of the GT Report),

1.             KeyInvest’s uplift in its Risk Management Framework (pages 13 to 14, 16

to 23 of the GT Report), and

1.             KeyInvest’s management of material or potential conflicts of interest and investment governance (pages 7 to 8, and 18 of the GT Report).

1.         remediates KeyInvest’s breaches of CPS 190 and CPS 220 notified to APRA

between 4 and 12 April 2024,

1.          addresses the root cause(s) of the following:
   1.             the breaches of CPS 190 and CPS 220 notified to APRA between 4 April 2024 and 12 April 2024, and the following deficiencies identified in the GT Report:

1.   KeyInvest’s Board effectiveness (pages 4 to 6, 17 to 18 of the GT Report),

1.    KeyInvest’s uplift in its Risk Management Framework (pages 13 to 14, 16 to 23 of the GT Report), and
2.    KeyInvest’s management of material or potential conflicts of interest and investment governance (pages 7 to 8, and 18 of the GT Report).

1.    If the Chair is unable to confirm the matters referred to in condition [10], the Chair must include a description of any material deviation from and the steps taken, or proposed to be taken, to remedy the material deviations.
2.    If the Chair is unavailable to provide the Attestation in condition 11, the Chair Attestation may be provided by another Director of KeyInvest.

You may request APRA reconsider the decision in accordance with subsection 236(1)(d) of the Act. The request for reconsideration must be made in writing, must set out the reasons for making the request, and must be given to APRA within 21 days after the day on which you first received notice of this decision, or within such further period as APRA allows. If you are dissatisfied with the outcome of APRA’s reconsideration of the decision, you may, subject to the Administrative Review Tribunal Act 2024, apply to the Administrative Review Tribunal for review of the reconsidered decision.