Super in the Spotlight
ASIC’s recent report (REP 777, 15 November 2023) highlights areas where the Regulator is focussing:
- poor design, pricing and distribution of financial products;
- insurance failures; and
- the protection of vulnerable consumers.
Most significantly for superannuation trustees, ASIC singled out addressing member outcomes in the superannuation sector as its headline priority, and cautioned that market participants should expect strong, targeted enforcement action in the coming months and into 2024. Mr Longo, ASIC Chair said:
“Our focus on the best interests of members in the superannuation sector is part of our continuing work to make the financial system fair for all Australians.”
The Report highlights that ASIC is drawing on its criminal, civil and administrative sanctions armoury in aiming for ‘proportionate’ responses to misconduct. For super, ASIC has taken civil penalty actions targeting greenwashing and failure to consolidate member accounts. The Report and announcement set a clear tone that the largest superannuation funds are within the enforcement cross hairs.
ASIC suggested that the current economic downturn is a factor driving the focus on member protection. Mr Longo announced:
“We know cost-of-living pressures are making life difficult for many Australians. Protecting consumers experiencing financial hardship has been a particular focus for ASIC this quarter in our enforcement and regulatory actions.”
To date, ASIC’s enforcement action in relation to the handling of customers’ hardship notices has been targeting lenders. Superannuation trustees should expect that applications for early release of super, insurance claim determinations and complaints handling may also come under the microscope in the next few months.
Trustees of super funds can expect to be subject to targeted scrutiny by ASIC and would be well advised to:
- be alive to greenwashing by sharpening end-to-end ESG and sustainability due diligence, PDS disclosures and marketing materials (noting ASIC’s reliance on YouTube and similar social media statements in its civil penalty greenwashing actions);
- monitoring the quality and timeframes of dealing with member applications for early release, insurance and death benefits and complaints management;
- target consolidation of members’ duplicate accounts, by reviewing rules and practices, whilst avoiding the pitfalls of members’ losing insurance entitlements through consolidation; and
- watch out for design and distribution obligations, including the terms of target market determinations – the time is right to assess practices and address any gaps.