ASIC taken to task for lack of action on industry funds

In a hearing of the parliamentary joint committee on corporations and financial services on Wednesday, senator Andrew Bragg questioned the corporate watchdog around two recent potential breaches by Hostplus and Australian Super.

ASIC commissioner Danielle Press conceded the $47 billion hospitality industry fund had used member reserves to pay off a fine, which it disclosed to members in its annual report.

“We are continuing to look at the use of reserves and disclosure – in the case you raised, we note they made a disclosure to members in their annual statement around the fine paid, which we felt was appropriate,” Ms Press told Mr Bragg.

“It’s an appropriate place for them to disclose the use of member funds.”

The case comes following Sunsuper admitting an $11,000 sponsorship of a Labor Party budget breakfast had breached its internal standards, with Ms Press saying ASIC was collaborating with APRA to develop better standards around how reserve funds could be used.

“The use of reserves for political donations and whether it meets the requirements of the sole purpose test is an issue for APRA – we continue to work with them around the appropriate use of reserves,” she said.

“The work is predominantly in APRA’s remit, [but] we are working with them. There is law reform that will change the use of reserves, we are looking at what the effect of that is as well.”

Mr Bragg also questioned the regulator around their failure to take action against Australian Super for introducing a ‘variable fee’ of up to 0.04 per cent to member accounts, which the fund said was due to the introduction of the Protecting Your Super laws.

Ms Press said ASIC had looked into whether the fee hike had been disclosed to fund members “in accordance with the requirements of the Corporations Act”, and had obtained legal advice on whether to take further action against the fund.

“The advice we obtained is that Australian Super had not breached its obligations in a manner that would be appropriate to take further action on,” she said.

“We suggested they may amend [member communications] to make it clearer and they did make it clearer in their second disclosure.”

Mr Bragg, whose recently published book Bad Egg looks at the $11 million of political contributions made by industry funds to unions in the last year, said in an FSC webinar on Thursday that current fund reporting standards were “clearly deficient”.

“I've raised it with ASIC at prior estimates hearings, why, when there've been fines paid out of members' money, they haven't been disclosed to members,” he said.

“I've raised in the past, how huge related party transactions happen between super funds and unions, which are not disclosed to members.”

Mr Bragg said Sunsuper’s sponsorship error was an “example of an above the line political donation” that was disclosed after the fact.