According to both the Australian Financial Review and The New Daily, ASIC is set to send out enquiries to 50 retail super funds regarding the manner in which they approach business clients.
The Australian Securities and Investment Commission (ASIC) is concerned that for-profit super funds are engaging in misleading marketing to install themselves as the default fund of choice for other businesses, a potentially lucrative position which can lead to multiple individual customers.
In an interview, ASIC senior executive leader of superannuation Gerald Fitzpatrick said, “We’ll be looking at all of the material around the super fund trustee relationship, including the type of marketing collateral funds give to employers.
“We are very interested in how members are treated, and if as a result of aggressive marketing approaches or competitive drive, whether members are being disadvantaged or are being provided with information that does not allow them to make appropriate investment decisions.”
ASIC’s investigation will focus on whether super funds have been using coercive marketing tactics or inducements in order to land default fund business. This will include reviewing the nature of advice which has been given to employers, as well as investigating the accuracy and completeness of product disclosure information.
As the government regulator of conduct and disclosure in the financial industry, ASIC is responsible for ensuring that customers receive fair and accurate information regarding investments and financial products. Their enforcement of the Corporations Act involves the regulation of all financial services providers, including licensed superannuation trustees.
— Nine News Australia (@9NewsAUS) January 26, 2017
The forthcoming investigation comes not long after ASIC announced new requirements for superannuation funds earlier in January. From 1 July 2017, super trustees with employer sub-plans must make all transparency information publicly available. Under the current relief, information relating only to employer sub-plans may be redacted or not published in public documents.
Transparency information mainly pertains to the running of the super fund itself, including details of executive remuneration and trustee governance, as well as annual reports, governing rules, and all relevant product disclosure statements.
ASIC’s latest action on super funds has also seen them impose additional licence conditions on NAB’s superannuation trustee, NULIS. ASIC’s enquiry found that breakdowns in compliance and risk management occurred at NULIS during changes to the insurance of around 400,000 customers in 2012 and 2013, including transfer of customers’ super to several MLC super fund products.
The failings included inadequate disclosure of insurance cover changes, specifically in death and total and permanent disablement (TPD) insurance, as well as inadequate staff training and a lack of updated policy information. The incorrect charges NAB imposed as a result amounted to approximately $34.7 million, an amount which NAB was forced to refund.