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Mercy Super Pty Ltd ABN 11 789 425 178 as trustee for Mercy Super Conflicts Management Policy February 2020

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Conflicts Management Policy February 2020

Document Title:

Conflicts Management Policy

Purpose of Document:

This Policy specifies the procedures to be adopted to identify, evaluate, monitor, mitigate, avoid or prudently manage as required any conflicts or potential conflicts that may be encountered by Mercy Super Pty Ltd as the Trustee of Mercy Super. The Policy is intended to fulfil the requirements of Prudential Standard SPS 521 Conflicts. The Policy also applies to the activities of Mercy Super Financial Services Pty Ltd.

Date Approved: 24 February 2020


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Revision History

The following updates have been made to this document

Version Prepared by Reason for revision Date of Trustee

Approval

1 Initial preparation of Policy as required by AFSL

Draft only

2 B Hutchinson Annual review and incorporation of Stronger Super requirements

29 August 2012

3 B Hutchinson Further Stronger Super revisions 26 November 2012

3(a) B Hutchinson & C Keath Final Stronger Super revisions accommodating APRA feedback

Draft only

3(b) N Sheppard Final review – for Board approval 30 August 2013

3(c) B Hutchinson and N Sheppard

Amendments to address APRA feedback 30 October 2013

4 B Hutchinson and N Sheppard

Annual review of policy 25 August 2014

4(a) B Hutchinson and N Sheppard

Annual, review, addition of limit for acceptable gifts

23 February 2015

5 B Hutchinson and N Sheppard

Annual review 23 May 2016

6 B Hutchinson Annual review 29 May 2017

6(a) B Hutchinson Amendments to address APRA prudential review recommendations

28 August 2017

7 B Hutchinson Annual review and adoption of internal audit recommendations

10 December 2018

8 B Hutchinson Annual review 24 February 2020


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Contents

Page

Revision History 2

1 Regulatory Requirement 5

2 Policy

2.1 Policy Principles

2.2 Identification

2.3 Management

2.4 Disclosures

2.5 Definitions and Examples

2.6 Materiality

2.7 Gifts

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3 Responsibility

3.1 Responsible Persons

3.2 All Responsible Persons and Management Office Staff

3.3 Specific Requirements for Directors

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4 Managing Conflicts

4.1 Obligations of the Trustee, Directors and Other Responsible Persons

4.2 Specific Measures for Dealing with Conflict

4.3 Conflicts Arising from Specific Relationships

4.4 Avoiding Conflict

4.5 Recurring Conflicts

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5 Controlling Gifts and Other Soft Dollar Payments

5.1 Definition

5.2 Examples of situations that may give rise to a conflict in relation to soft dollar payments

5.3 Action in respect of gifts or soft dollar payments

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6 Complying with the Policy

6.1 Directors

6.2 Management Office Staff

6.3 Disclosure of Non-compliance and Whistle-blowing

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7 Review of Conflicts Management Policy

7.1 Annual Review

7.2 Three-yearly Independent Review

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8 Related Policies 22


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1. Regulatory Requirement

Mercy Super Pty Ltd (the Trustee), as trustee of Mercy Super (the Fund), the licensee of a Registrable Superannuation Entity (RSE), the holder of an Australian Financial Services Licence (AFSL), and the provider of an authorised MySuper product, recognises its obligation under section 912A(1)(aa) of the Corporations Act and Prudential Standard SPS 521 Conflicts of Interest made in accordance with sections 52(2)(d)(iv) and 34C of the Superannuation Industry (Supervision) Act (SIS Act), to ensure that it has, at all times, adequate arrangements for the management of conflicts that may arise wholly or partially in relation to activities undertaken by the Trustee or a representative of the Trustee in the provision of financial services. In addition, the Trustee recognises that it must do all things necessary to ensure that the financial services covered by its AFSL are provided efficiently, honestly and fairly in accordance with section 912A(1)(a) of the Act.

A key responsibility of the Trustee is identifying, managing and, where possible, avoiding any conflicts.

This Conflicts Management Policy (the Policy) forms part of the Mercy Super Conflicts Framework which itself is a key component of the Fund’s Risk Management Framework. In addition to this Policy, the other key elements of the Trustee’s Conflict Management Framework are:

• Register of Relevant Duties and Relevant Interests for Responsible Persons (maintained on the ExtraTextual platform and known in ExtraTextual as the Conflicts Register), and

• The inclusion of clear definitions and provision of training regarding the duties and obligations of all Responsible Persons with respect to conflicts management and to those in Responsible Person positions.

2. Policy

2.1 Policy Principles

The Trustee adopts a comprehensive approach to managing situations where a conflict may arise. The approach adopted by the Trustee is based upon the principles of:

• Identify,

• Manage, and

• Disclose.

This Policy in intended to ensure that the activities of those involved in the governance and management of the Fund and Mercy Super Financial Services Pty Ltd are conducted in a manner appropriate to meeting the best interests of members and their dependents. This includes on-going compliance with all regulatory obligations.

The Trustee recognises that situations may arise where the interests of Directors, other Responsible Persons and management staff may be in conflict with those of Fund beneficiaries or where the person may be subject to an obligation, actual or implied, to act


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other than in the best interests of members. Accordingly, this Policy includes mechanisms for identifying, managing and disclosing such conflicts.

2.2 Identification

Based on all the information reasonably available to it, the Trustee will take all reasonable steps to:

• Identify all Relevant Duties and Interests held by the Trustee, the Directors and other Responsible Persons

• Identify and monitor all potential and actual conflicts between any relevant duties and interests and the best interests of Fund beneficiaries

• Identify circumstances that might give rise to a conflict or obligation

• Identify any areas where such conflicts or potential conflicts could compromise or potentially compromise the discharge of the Trustee’s responsibilities to act in the best interests of Fund beneficiaries in accordance with the SIS Act

• Avoid conflicts where it is necessary or prudent to do so

• Appropriately manage conflicts where they cannot be reasonably avoided.

All conflicts and potential conflicts identified will be recorded in the Trustee meeting minutes at which they are considered. Such minutes shall include:

• Details of the conflict or potential conflict, including the possible impact on the Trustee’s fiduciary duties to members and beneficiaries

• The names of the persons and organisations involved

• Evaluation of the conflict

• Action taken by the Trustee to avoid or prudently manage the conflict.

2.3 Management

The Trustee maintains a register which forms a key part of the management of identified potential or actual conflicts.

2.3.1. Register of Relevant Duties and Relevant Interests

The Trustee will maintain a Register of Relevant Duties and Relevant Interests in respect of all Responsible Persons.

A Relevant Duty refers to any duty owed by the Trustee, or a Responsible Person of the Trustee, to Fund beneficiaries or to any other person as defined in Section 2.5.1 of this Policy.

A Relevant Interest of the Trustee, a Trustee director, a director of an associate of the Trustee or other Responsible Person of the Trustee refers to any interest, gift, emolument or benefit, whether pecuniary or non-pecuniary, directly or indirectly held by the Trustee, the associate or the Responsible Person as defined in Section 2.5.1 of this Policy.

2.3.2 Maintenance of the Register


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The Fund’s Risk and Compliance Manager shall be responsible for maintaining the Register of Relevant Duties and Relevant Interests (the Conflicts Register). This shall include:

• Arranging the initial completion of the Declaration in relation to Relevant Duties and Relevant Interests by all potential Responsible Persons prior to their being appointed to the responsible position,

• Arranging the completion of an up-to-date Declaration in relation to Relevant Duties and Relevant Interests by all Responsible Persons at least annually, and

• Reviewing the Register in accordance with the requirements of the Section 7 of this Policy. Such review will be undertaken at least annually.

Directors and other Responsible Persons are responsible for advising the Risk and Compliance Manager of any new or changed duties or interests as soon as practicable.

The Company Secretary will notify the Trustee of any new or changed matter that has been identified and recorded in the Register at each Trustee meeting so that the Trustee can determine if the matter requires further consideration or action.

The Register of Relevant Duties and Interests will be updated whenever a material change occurs in accordance with the requirements of ASIC Regulatory Guide RG 252. Details of ongoing interests (e.g. Responsible Persons' superannuation account balances in the Fund) will be updated at least annually.

All completed Declarations in relation to Relevant Duties and Relevant Interests will be provided to the Risk and Compliance Manager who will arrange for them to be considered at the next scheduled Trustee meeting.

2.4 Disclosures

2.4.1 New Responsible Persons

Prior to taking up any appointment with the Trustee, all incoming Responsible Persons are required to disclose all relevant duties and relevant interests by completing the Disclosure of Relevant Duties and Relevant Interests section of the Responsible Person Eligibility Declaration. The Risk and Compliance Manager will be responsible for ensuring that these disclosures are entered into the Register.

As part of their induction process, all new Responsible Persons will be provided with appropriate training to ensure awareness and acknowledgement of potential conflicts arising from their roles and of their responsibility for declaring any such conflicts as required under this Policy.

2.4.2 Existing Responsible Persons

Existing Responsible Persons are required to complete a new Responsible Person Eligibility Declaration annually. In addition, all Responsible Persons are required to complete a new Responsible Person Eligibility Declaration no later than the date of the next Trustee meeting if there is a material change in their relevant duties or relevant interests.

Ongoing training will be provided to existing Responsible Persons to remind them of their obligations and responsibilities in appropriately managing conflict. As part of the


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appointment process for any material business partner, Responsible Persons will be required to declare any potential conflicts of interest.

2.5 Definitions and Examples

2.5.1 Relevant Duty or Relevant Interest

A Relevant Duty or Relevant Interest is one that might reasonably be considered to have the potential to have a significant impact on the capacity of the Trustee as a whole, a Trustee director, a director of an associate of the Trustee or other Responsible Person of the Trustee with the Relevant Duty or holding the Relevant Interest, to act in a manner that is consistent with the best interests of Fund beneficiaries.

The responsibility for the final determination of whether a relevant duty or interest exists rests with the Trustee. In relation to routine operational matters not involving material outsourced activities, the Trustee may delegate responsibility for this determination to the Chief Executive Officer (CEO) or the Risk and Compliance Manager. In determining if a particular duty or interest is relevant, the Trustee or manager will have regard to, at least:

• The nature of the relationship between the party to whom the duty or interest is owed and the Fund, its beneficiaries and the Trustee

• The extent to which the individual has authority to make decisions in relation to the relationship

• The extent to which the individual may benefit, either directly or indirectly, as a result of the relationship

• The extent to which the party may be able to exert influence over the decision making of the Responsible Person

• The extent to which the relationship places an obligation on the Responsible Person to act other than in the best interests of members.

In any situation where there is any doubt as to the relevance of a particular duty or interest, the Responsible Person will be obliged to report the matter to the CEO, the Risk and Compliance Manager or the Trustee for consideration as appropriate. All matters reported by a Director or other Responsible Manager will be recorded in the Conflicts Register. The Register entry will note whether the matter is considered relevant or not. Where the manager or Trustee cannot make a clear determination, the matter will be considered to be relevant.

If, having considered the above and any other relevant factors, it is determined that a relevant duty or interest exists, the Trustee will take all necessary steps to deal with any resulting conflict in accordance with this Policy.

2.5.2 Conflict

A conflict may arise when some or all of the interests of the Fund beneficiaries to whom the Trustee provides financial services are inconsistent with, or diverge from, some or all of the interests and/or duties of the Trustee or its representatives. This includes actual, apparent and potential conflicts.


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For the purposes of this Policy, a reference to a ‘conflict’ is a reference to a conflict:

• Between the duties owed by the Trustee, or a Responsible Person of the Trustee, to beneficiaries and the duties owed by them to any other person

• Between the interests of beneficiaries and the duties owed by the Trustee, or a Responsible Person of the Trustee, to any other person

• Between a relevant interest of the Trustee, a Trustee director, a director of an associate of the Trustee or other Responsible Person of the Trustee and their duties to Fund beneficiaries

• Between a relevant interest of the Trustee, a Trustee director, a director of an associate of the Trustee or other Responsible Person of the Trustee and the interests of Fund beneficiaries.

A conflict will include any situation where:

• A Responsible Person’s personal interests and/or duties, or

• Those of a close friend, family member, business associate, corporation or partnership in which a Responsible Person holds a significant interest, or a person to whom a Responsible Person owes an obligation

could influence a decision and/or impair a Responsible Person’s ability to:

• Act in the Fund’s, members’ and members’ dependants' best interests, or

• Represent the Fund fairly, impartially and without bias.

A conflict can be:

• Actual – where the conflict exists at that moment

• Apparent – where the conflict is capable of being understood to exist by affected parties

• Potential – where the conflict does not actually exist at that moment in time but may occur in the future

• Perceived – where there is no actual conflict but an affected party may reasonably construe the circumstance to indicate the existence of conflict.

The Trustee recognises that a conflict can arise where the interests of any of the following are not in accord with each other, and result in actions which may not be, or may be perceived not to be, in the best interests or the priority of Fund beneficiaries:

• Members of the Fund and their dependants

• An employer or other sponsor

• Fund management staff

• External service providers

• Directors of the Trustee Board

• Other Responsible Persons.


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2.5.3 Examples of situations that may give rise to conflict

Examples of situations that will or will potentially give rise to conflict include (this list is not intended to be exhaustive):

• A Responsible Person or their immediate family member has an interest in and or gains a financial benefit from an external service provider or has a substantial holding in such an entity

• A Director is also a Director of or holds a senior position with another, unrelated superannuation fund

2.5.3.1 Substantial holding in another entity

A 'substantial holding' in an entity to which a Responsible Person owes a duty or in which they hold an interest would be one where they can materially influence the decision-making process of that entity or are entitled to receive a material benefit from that entity. The actual amounts in each case may vary depending on circumstances and would be subject to reasonable interpretation by the Trustee on a case-by-case basis. At the extremes, a person holding an interest in a publicly listed entity as a normal retail shareholder would not generally be deemed to have a substantial holding whereas being the sole or majority owner of a smaller enterprise definitely would. As a guide only, a holding of ten percent (10%) or more in an entity would potentially be considered a substantial holding.

2.5.3.2 Holding a position with another fund

The Trustee considers that it is generally inappropriate for directors of the Trustee to hold positions with other funds. The Trustee would not seek to appoint any director who held a position with another fund except in exceptional circumstances. In such a case, the Trustee would seek the approval of the relevant regulator prior to any appointment.

2.5.4 Untenable conflicts

The Trustee considers an untenable conflict to be one which places a Responsible Person in such a position that it would be unreasonable for the individual to be able to make a decision that was not subject to the influence of a duty or obligation owed to or an interest held in to another party. Examples of such a situation would be where the individual or a close associate held a duty to or interest in a direct competitor of the Fund or a material outsourced service provider, or a body being considered to provide material outsourced services.

A Responsible Person is prohibited from participating in any decision that may involve them in an untenable conflict. If an untenable conflict is ongoing, the Trustee would formally consider the individual's ability to continue to participate in the management of the Fund.

In any of the above situations, the Responsible Person involved is obliged to report the matter to the appropriate person and record it in the Register.

2.5.5 Examples of situations that will give rise to a breach of this Policy

Examples of situations that would give rise to a breach of this Policy include (this list is not intended to be exhaustive):


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• A related party transaction that has not been conducted at arm’s length

• The Trustee is subject to a controlling influence that is divergent from the best interests of Fund beneficiaries

• A direction is received from an employer or other sponsor that may not be in the best interests of Fund beneficiaries

• Discretions and delegations are not acted upon in good faith, for real and genuine considerations and for the purpose for which they were conferred

• Advice is biased.

Any such breach must be reported to the appropriate manager and the Trustee who will take the necessary action to address the breach and, if appropriate, advise APRA.

2.6 Materiality

To provide some guidance to Directors and Responsible Persons, any interest with an equivalent value of $1,000 or greater shall be considered a Relevant Interest for the purposes of this Policy and Prudential Standard SPS 521 Conflicts of Interest and must be recorded accordingly. This does not preclude an interest with an equivalent value of less than $1,000 being a potentially Relevant Interest in accordance with the definition in Section 2.5.1 above. Such interests must be considered on their individual merits and disclosed as appropriate.

See also section 2.5.3.1 above - Substantial holding in another entity

2.7 Gifts

In addition to conflicts arising out of the duties and interests of Responsible Persons, the Trustee recognises that those persons, and other Fund management, may from time to time be offered gifts or other soft dollar payments that may have the potential to influence their activities and therefore to give rise to a conflict or obligation to another party. In order to monitor and control this potential influence, the Trustee has established guidelines regarding the acceptance and recording of gifts and other soft dollar payments by Responsible Persons and other management office staff. These guidelines are contained in Section 5 of this Policy.

3. Responsibility

The Trustee is responsible for managing conflicts. Monitoring and review of on-going compliance is the responsibility of the Trustee and will be supported by Fund management.

3.1 Responsible Persons

Persons performing the following roles will be considered to be Responsible Persons for the purposes of this Policy:

• Mercy Super Pty Ltd - the following positions:

o All Directors


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o Company Secretary

• Mercy Super - the following positions or equivalent:

o Chief Executive Officer

o Operations Manager

o Manager Member Experience

o Marketing and Communications Manager

o Risk and Compliance Manager

o Manager Investment Governance

• External service providers

o Auditors

o Actuary

3.2 All Responsible Persons and Management Office Staff

Each Responsible Person and Management office staff member is required to:

• Disclose all relevant information to be recorded in the Conflicts Register, including any material changes to this information

• Comply with the requirements of this Policy on a personal level

• Refrain from influencing other Responsible Persons of the Trustee to act in a manner that will benefit their interests where the presence of a conflict precludes them from acting appropriately and according to this Policy.

If a Responsible Person has a conflict or believes that they may have one, it is to be disclosed to an appropriate person for them to make comment and assess. An ‘appropriate person’ is, for a Director or the CEO, the Board of the Trustee, for any other Responsible Person, the CEO or the Risk and Compliance Manager.

Relevant Duties and Interests include commercial interests, directorships, official duties, substantial shareholdings of a service provider (including a related party service provider) or other relationships that the Responsible Person has that could potentially cause a conflict. This includes other interests that may influence the Responsible Person’s ability to carry out their role and function with the degree of probity and independence required or with an appropriate duty of care to Fund members.

3.3 Specific Requirements for Directors of the Trustee

Each Director of the Trustee is to disclose all relevant interests and relevant duties and any related conflicts or potential conflicts not previously recorded in the Register at the commencement of each Trustee meeting. A previously unregistered interest or duty can also be reported at any time to the Chairman or Company Secretary. An amended Declaration in relation to Relevant Duties and Relevant Interests must be completed within 30 days of becoming aware of the new relevant interest or duty and provided to the Risk and Compliance Manager.


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Conflicts involving Directors are to be recorded in the Trustee meeting minutes or at the very least it must be recorded that a conflict may exist and if applicable, that the Director is to refrain from voting on the matter giving rise to the conflict. If applicable, the Director is to be excluded from that part of the meeting during which the matter giving rise to the conflict is being discussed and is to refrain from all discussions of the matter giving rise to the conflict at any meeting of the Trustee or elsewhere.

4. Managing Conflicts

The Trustee, all Responsible Persons and management office staff will take all reasonable steps to identify, monitor, control, manage and avoid conflict as appropriate. Key elements involved in managing conflict are based on measures that will allow:

• Ready identification and recording of actual, potential or perceived conflicts

• Assessment of identified conflicts and their impact on the duties of Responsible Persons to Fund members, the business operations and reputation of the Fund

• On-going review of the Register to ensure no issue previously identified as not giving rise to conflict does not now do so, and

• Measures for deciding on appropriate responses to conflict.

4.1 Obligations of the Trustee, Directors and Other Responsible Persons

Where it is identified that there is a conflict between the duties of the Trustee, Director or other Responsible Person to Fund beneficiaries and the duties of that Trustee, Director or other Responsible Person to any other person or entity, that Trustee, Director or other Responsible Person shall be obliged to:

• Give priority to their duties to and the interests of Fund beneficiaries over their duties to and interests of other persons

• Ensure that their duties to Fund beneficiaries are met despite the conflict

• Ensure that the interests of Fund beneficiaries are not adversely affected by the conflict, and

• Comply with the Prudential Standards in relation to conflicts.

4.2 Specific Measures for Dealing with Conflict

The Trustee has determined that each conflict will be reviewed individually and considered by the Trustee on its own merits and a determination will be made and recorded in the minutes at that time. In making any such determination, the primary consideration will be whether the conflict or potential conflict could compromise or potentially compromise the discharge of the Responsible Person’s obligation to act in the best interests of Fund beneficiaries.

All conflicts brought to the attention of the Trustee will be recorded in the Register.


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If, having considered the interests and duties identified and entered into the Register, the Trustee considers a conflict exists or potentially exists, the Trustee will decide whether the conflict is to be avoided or managed.

The decision to manage a conflict will be reviewed on a regular basis to ensure the controls implemented remain appropriate and are working effectively. In practice, any actual or potential conflicts involving Directors, the CEO or Company Secretary are disclosed and/or reviewed at the beginning of each Trustee meeting. Conflicts or potential conflicts involving other Responsible Persons are reviewed by the CEO and Risk and Compliance Manager as part of the quarterly risk and compliance reporting process.

Examples of specific measures the Trustee may adopt for dealing with conflict are listed below. In all cases, the Trustee will be responsible for deciding the appropriate action for managing the conflict, never the person concerned.

• Avoiding the conflict by choosing an alternative product or service provider

• If the conflict relates to a particular Responsible Person, requiring that person to restrict their activities or refrain from participating in any discussion or decisions in relation to the issue that is the source of the conflict. Specific mechanisms for achieving this are described in sections 4.2.1 and 4.2.2.

• Where the conflict has the potential to adversely impact one or more parties, the Trustee will fully disclose the concern to those affected parties and seek their advice as to whether they are comfortable to proceed in the circumstances

• Engage an independent, disinterested third party to manage the activity that is the source of the conflict

• Require that the Responsible Person involved in the conflict relinquish the interest that is the source of the conflict.

The Trustee may undertake any or all of these measures or such other measures considered appropriate to the circumstances and in the best interests of Fund beneficiaries.

4.2.1 Directors

Prior to appointment to the position of Director and each year thereafter, each Director is required to complete a Responsible Person Eligibility Declaration. The declaration requires the potential Director to advise whether they are aware of any conflicts and, if so, a written submission is required.

The Trustee may accept the existence of certain conflicts and agree that they will not materially influence the ability of the Responsible Person to conduct their activities in an appropriate manner. If a conflict is to be accepted, the interested Director must refrain from the vote where the Board accepts the existence of that conflict.

A standing agenda item at all Trustee meetings is disclosure of any potential conflict by individual Directors. As a Responsible Person of the Fund, it is a requirement and expectation that all relevant interests and duties and related potential conflicts not


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previously recorded in the Register will be disclosed at the beginning of the first available Trustee meeting.

Where a conflict arises in connection with a Director they will generally be required to take the following steps:

• Promptly declaring to the Trustee any conflict. Such a declaration is to be recorded in the Register as appropriate and the minutes of the applicable meeting(s).

• If applicable, and if considered appropriate by the other Directors, absenting themselves from that part of the meeting during which the matter giving rise to the conflict is being discussed. Any such absence is to be recorded in the minutes of the meeting.

• Refraining from all discussions of the matter giving rise to the conflict, at any meeting of the Trustee, or elsewhere

• If applicable, and if considered appropriate by the remaining Directors, refraining from voting on the matter giving rise to the conflict at any Trustee meeting.

The Trustee may however determine that there is no need for the Director to absent themselves or refrain from contributing to discussion or voting. This may occur where disclosure is provided and sufficient information is available for the Trustee to determine that the conflict will not affect the ability of the Director to conduct their activities in an appropriate manner in the current situation and the matter can be managed with the Director being present.

If, in the opinion of the remaining Directors, such a conflict is likely to be on-going and cannot be reasonably managed or avoided, the Trustee will assess whether the Director involved can continue to hold their position. This will involve:

• The conflicted Director will step aside for a period of 30 days. During this period, an independent legal opinion will be obtained from a properly qualified legal practitioner with appropriate experience in superannuation matters as to the practicality and appropriateness of the Director continuing to hold their position. All Directors are required to make themselves reasonably available to the appointed legal representative.

• The legal opinion will be considered by all remaining Directors

• Having considered all the relevant factors, if the remaining Directors still consider that the conflict is on-going and cannot be reasonably managed or avoided, it will be deemed that the Director in question has resigned and the resignation accepted. The normal process for replacing a Director will then be activated.

4.2.2 CEO and Other Responsible Persons

Where a conflict arises in connection with a CEO or other Responsible Person who is not a director of the Trustee, the following steps will generally be taken:

• The conflict is to be recorded in the Conflicts Register.

• The CEO must report any conflict promptly to the Trustee. A conflict can be reported at any time to the Chairman and does not have to wait until the next Trustee meeting. The


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Chairman will, in the first instance, deal with the conflict and if need be, consult other Directors. The reporting of the conflict is to be recorded in the minutes of the next Trustee meeting.

• If the Responsible Person reports to the Trustee, any conflict is to be promptly declared to the Trustee. A conflict can be reported at any time to the Chairman and does not have to wait until the next Trustee meeting. The Chairman will, in the first instance, deal with the conflict and if need be, consult other Directors. Any conflict brought to the attention of the Chairman will be reported to the Trustee, irrespective of whether the Chairman considers a conflict actually exists. The reporting of the conflict is to be recorded in the minutes of the next Trustee meeting.

• If the Responsible Person does not report to the Trustee, a conflict is to be reported to the CEO. The conflict will be addressed by the CEO in consultation with the Chairman or other available Director. If applicable, the reporting of the conflict will be recorded in the minutes of the next Trustee meeting.

• The Responsible Person must refrain from contributing to discussion or expressing opinions on the matter giving rise to the conflict at any meeting or contributing to any recommendations that may be considered at a Trustee meeting.

The Trustee may however determine that there is no need for the Responsible Person to excuse themselves or refrain from contributing to discussion or expressing opinions on matters considered at Trustee meetings. This may occur where disclosure is provided and sufficient information is available for the Trustee to determine that the conflict will not affect the ability of the Responsible Person to conduct their activities in an appropriate manner in the current situation and the matter can be managed with the Responsible Person being present.

If, in the opinion of the Trustee or the CEO, such a conflict is likely to be on-going and cannot be reasonably managed or avoided, the Trustee or its delegate will assess whether the Responsible Person involved can continue to hold their position. This will generally involve:

• Seeking independent legal advice to assist such a determination.

• Reviewing the responsibilities of the individual concerned to determine if another Responsible Person can assume responsibility for the matter causing the conflict

• Having considered all the relevant factors, if the Trustee still considers that the conflict is on-going and cannot be reasonably managed or avoided, it may be necessary to remove the conflicted person from the role that is giving rise to the conflict

• If the conflict involves the CEO, the above steps will be undertaken by the Trustee or its appointed delegate other than the CEO.

4.3 Conflicts Arising from Specific Relationships

The Trustee recognises that certain relationships, for example with key service providers, may have the potential to be a source of conflict. To address this, the Trustee will take the following steps to identify and monitor any such conflicts:


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• Prior to establishing any relationship with a new service provider or adviser, the Trustee (or CEO if so delegated by the Trustee) shall make all reasonable enquiries and undertake appropriate due diligence to identify and address any conflict or potential conflict arising from the relationship

• At least annually, the Trustee (or CEO if so delegated by the Trustee) shall review all current relationships between the Trustee or a Responsible Person and service providers and advisers to identify and address any conflict or potential conflict arising from the relationship

• All relationships with external service providers and advisers will be subject to written contractual arrangements that include, where practical, specific, measurable and objective performance indicators which are reviewed by the Trustee at least annually.

In the event of a conflict being identified that the Trustee believes cannot reasonably be managed or avoided, the Trustee may take the following steps:

• Seek independent legal advice to assist in determining if the conflict can be managed or avoided

• Review the external service provider’s relationship and the services provided to determine if another service provider may be engaged to provide the services

• Review whether the service provider’s continued relationship with the Trustee and provision of services is appropriate.

4.4 Avoiding Conflict

Where the Trustee decides that avoiding the conflict is the most appropriate course of action, the Trustee will direct the relevant party to take such measures as necessary to do so.

In the case of Directors, the methods which may be deemed appropriate include the conflicted party not receiving Trustee papers, being absent from Trustee deliberations and abstaining from voting on particular matters.

In certain cases where conflict cannot be reasonably managed it may be necessary to permanently remove the Responsible Person, external service provider or management office staff member from their position in order to avoid conflict. In this case, the appropriate procedures for such removal will be undertaken as set out above.

4.5 Recurring Conflicts

Potential conflicts of a recurring nature that are being appropriately managed or avoided do not need to be disclosed every time that matter or topic is discussed, providing the conflict and its continuing nature have been recorded in the Register and been considered and managed in accordance with this Policy.


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5. Controlling Gifts and other Soft Dollar Payments

As noted in Section 2.7 of this Policy, the Trustee acknowledges the potential for gifts and other soft dollar payments to influence or to be perceived as influencing the activities of Directors and other Responsible Persons and management office staff, and therefore to give rise to a conflict. In order to monitor and control this potential influence, the Trustee has established the following guidelines regarding the acceptance and recording of gifts and other soft dollar payments by Directors and other Responsible Persons and management office staff.

The guidelines also recognise that the timing of such inducements may be more or less likely to give rise to a conflict. They therefore impose more stringent restrictions during times when such influence is likely to be at its greatest.

This Policy applies to the receipt of any soft dollar payment or any other benefit (which may or may not be perceived as a conflict or potential conflict), and not just those received from service providers.

5.1 Definition

Gifts and soft dollar payments include, but are not limited to, tangible items, sports activities such as golf games, entertainment including attendance at cultural and sporting events, travel and tourism benefits, hospitality, meals and other benefits that may be provided to Directors, Responsible Persons, and/or other management office staff by external service providers, clients or other third parties that may, when subject to probity and propriety processes, give rise to questions regarding the appropriateness of receiving such items or place the recipient under an obligation to the provider.

5.2 Examples of situations that may give rise to a conflict in relation to soft dollar payments

Examples of situations that may give rise to a conflict in relation to soft dollar payments are where:

• a payment that creates or implies an obligation (either present or in the future) on either party, and/or

• Directors and other Responsible Persons and management office staff promoting one product or service over another in exchange for a payment or soft dollar reward, irrespective of whether or not the product or service is in the best interests of the recipient/member.

The Conflicts Register is used to record and monitor the offer and acceptance of such payments.


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5.3 Action in respect of gifts or soft dollar payments

Where a gift or soft dollar payment has been offered, the action required is summarised in the following table.

Who Value Acceptable Approval required

Record on Conflicts Register

Director/CEO/Other Responsible Person

<$150 Yes No No

$150 to <$300 Yes No Yes

$300 to $1,000 Yes Yes Yes

>$1,000 No but see

below N/A but see

below N/A but see

below

Other Fund staff

<$100 Yes No No

$100 - <$150 Yes Yes No

$150 to <$300 Yes Yes Yes

$300 to $,1000 Yes Yes Yes

> $1,000 No but see

below N/A but see

below N/A but see

below

5.3.1 Exceptions and Cumulative Value

• No gifts may be accepted from potential and/or existing service providers, where the provision of a service is currently being negotiated or a contract is due to be renewed. For the purposes of this Policy, a contract shall be deemed to be due to be renewed if more than 75% of the contract period has expired.

• Where a Director or other Responsible Person or management office staff member receives multiple gifts from the same source within a 12 month period, the cumulative value of the gifts shall be used to determine the appropriate action in accordance with this Policy. For example, if two gifts are received with a value of $200 each, acceptance of the second gift will be subject to the provisions relating to gifts valued between $300 and $1,000.

• As a general principle, no gift valued in excess of $1,000, or gifts with a cumulative value in excess of $1,000 received within a 12 month period, may be accepted by any person. Any exception to this principle can only be approved by the full Trustee Board after considering all relevant information and where it can be clearly determined that acceptance of the gift is in the best interests of the Fund and does not give rise to any conflict of interest or obligation. The granting of the exception and related Trustee


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deliberations will be recorded in the relevant meeting minutes and the gift(s) recorded in the Conflicts Register.

5.3.2 Gifts that may give rise to a relevant duty, relevant interest or conflict

Responsible Persons must be aware that accepting ANY gift (whether within the limits outlined above or not) may have the potential to give rise to an obligation or influence a relevant duty or interest and therefore create a potential conflict. Responsible Persons should consider any gift in relation to their overriding obligation to act in the best interests of the members of the Fund and, where appropriate, bring the issue to the attention of the relevant manager or the Trustee. This would also include recording any relevant matter in the Conflicts Register.

The Trustee will, as part of its review of the Conflicts Register (which is a standing agenda item at every meeting), consider the potential implications of any gifts offered or accepted and take all necessary steps to manage any conflict that arises as a result.

Decisions made in relation to gifts are to be recorded in the minutes of the Trustee meetings.

6. Complying with the Policy

All conflicts, whether actual, potential or perceived, are to be dealt with and resolved swiftly and in an unbiased and professional manner. Conflicts must be appropriately managed or avoided.

At all times the decision regarding the management of conflicts is vested in the Trustee. The Trustee may consider submissions from relevant persons regarding the conflict, however the Trustee retains ultimate discretion in this matter. In exercising its discretion, the primary consideration of the Trustee will be whether the conflict or potential conflict, if not properly managed, could compromise or potentially compromise its obligation to act in the best interests of Fund beneficiaries.

Failure to follow the requirements above, including not disclosing relevant interests or duties or failing to declare gifts or return them if directed to do so, will lead to disciplinary action being taken, which may include dismissal. Disciplinary action is at the discretion of the Trustee and will be determined by the facts and severity of each individual case.

Any failure by a Director to follow the requirements of this Policy will be dealt with in accordance with the provisions of the Policy.

6.1 Directors

Directors are expected to have a comprehensive working knowledge of this Policy and their ongoing obligations. This is reinforced through the consideration of relevant conflicts or potential conflicts as a standing agenda item at every Board meeting. Directors also undertake regular training on governance matters, including conflicts management. Directors will be made aware of any material changes to this Policy at the earliest practicable opportunity.


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6.2 Fund Management Staff

All Fund management staff are to be made aware of the Conflicts Management Framework and their obligations under this Policy, including the sanctions that may apply for breaches of the Policy, on commencement of employment with the Fund.

The CEO shall be responsible for providing newly appointed Responsible Persons with a copy of this Policy if they have not already received one in the course of their application and appointment. The CEO shall further be responsible for ensuring all staff are made of aware of the Policy and their on-going obligations under the Policy. This includes periodic training and ‘refresher’ programmes, generally conducted as part of regular team training sessions. Where material changes to this Policy are made, these will be addressed at the next scheduled training opportunity.

6.3 Disclosure of Non-compliance and Whistleblowing

A person may become aware that another individual has failed to act in accordance with this Policy. This could include becoming aware that another person has not disclosed an interest or duty that could give rise to conflict, or has failed to refuse or disclose a gift or soft dollar payment as required. A person who becomes aware such non-compliance is obliged to bring the matter to the attention of their manager in accordance with the Fund's Whistleblower Policy.

7. Review of Conflicts Management Policy

7.1 Annual Review

The Trustee is responsible for monitoring this Policy, which is reviewed annually. The Risk and Compliance Manager shall be responsible for undertaking this review. The Trustee’s review shall consider, as a minimum:

• Whether all relevant duties and all relevant interests have been identified and are being addressed in accordance with the Trustee’s conflicts management framework

• The adequacy and appropriateness of the Policy

• The level of compliance with the Policy, including reporting on the Register, and

• Any non-compliance with the Policy, including steps taken to return to and improve on-going compliance.

7.2 Three-yearly Independent Review

In addition to the annual review outlined above, the Trustee will ensure that the appropriateness, effectiveness and adequacy of the Conflicts Management Policy are subject to a comprehensive review by operationally independent, appropriately trained and competent persons at least every three years.


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8. Related Policies

• Fit and Proper Policy

• Whistleblower Policy

• Risk Management Framework

• Board Charter

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