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.
Those industry super fund should be ashamed. The one that donated to a Labor Party breakfast is deplorable and head should roll over that and personal fines OR jail time for accessing members super without permission or legal precedent. – and ASIC is out there chasing down advisers. The world is upside down and getting worse . . .
Calling Jane Hume….calling Jane Hume.
You are required at the Principal’s office immediately to explain a very serious matter in the playground.
Are industry funds the Australian version of the NRA in the U.S.?
So when does paying off a fine using member’s monies constitute satisfying the sole purpose test.
It doesn’t matter it was member’s ” reserves” or if the disclosure was made in an annual report, the fact is that the payment of a fine does not., will not and never enhance the member’s retirement benefits.
In fact, pilfering member’s reserves in order to pay a fine constitutes a reduction in member’s security and therefore the potential to lessen member’s retirement benefits.
How on earth is this allowed to continue when the sole purpose test is clear and concise in it’s definition and determination of the trustee responsibility.
If this practice does not breach the sole purpose test, then either the test itself is a farce or APRA is deficient in allowing this to occur on their watch.
If anyone is a member of either of these two funds, submit a formal complaint to AFCA and demand a refund.
Disclosed or undisclosed a payment from reserves is a payment of members money for the benefit of persons “other than the members”. A fine is a liability against administration fees & charges, a punishment for misconduct, which should have reduced the assets of the perpetrator. not the assets of the customers. The ffect is to make the advertising that “industry funds work only for members” incorrect and the therefore “misleading and deceptive” and a breach of the Corporations Act. Pinocio’s nose is getting longer and longer: “From little lies, big lies grow”!!!
If the Fed Govt was serious about Industry Funds, it would but the Parliamentary Employee Super fund (that the previous Labor Govt handed to AustralianSuper) out to Tender immediately. 10 years without a tender review is ridiculous, not to mention an insult to any other industry or corporate fund that might like to tender. All animals are equal, but some are more equal than others.
$11,000 sponsorship of a Labor party breakfast by Sunsuper….now that’s a great way to invest members money. I would appreciate an FPA member explain to me why they would continue to support an industry association that accepts similar payments, when Professional bodies only accepts payments from practicing members. This is clear evidence that these insto’s and super funds can well and truly bribe there way through life. This $11,000 firepower highlights the competition we face, the lack of bargaining power individual planners have when we’re competing against large super funds and insto’s. A classic example is AMP “shaping the direction of advice” in Australia by bribing the FPA via the Professional Partner Program sending the advice industry in a certain direction and then AMP shafting AMP planners.
No mention of the website in large predominate writing of Hostplus saying that there fund “only” costs $1.50 per week.
It really is time that these industry superfunds and ASIC’s absolute bias of favouritism towards them is cut off at the neck permanently. You are either a Corporate Regulator or your aren’t…you can’t be selective on your approach.
ASIC has been biased towards industry superfunds as long as I’ve been in this industry but its relentless attack on the non-industry superfunds and its advisers over the last 5-6 years has been particularly evil and aggressive. It must stop so I applaud it finally it being highlighted by Government MP’s.
Perpahs the attack on non-industry superfunds and advisers is due to the sheer scale of fraud, greed and unethical behaviour? Go and read the findings of the RC again.
Not one investigation completed against the industry funds not one… They confirmed this in the RC
Hooray
Same old same old. I though APRA had already said they didn’t have a problem with member funds being directed to parties as donations. Two sets of rules in this industry. Where is the MSM ?
oh yes, we have seen this conflicted behaviour occurring since when Jesus was born. Is that also misconduct, related party transfers, influencing for other purposes outside the sole purpose test ?
Andrew, don’t forget Hostplus recently revalued their property assets just prior to 30 June following a devaluation of the same assets in March, I wonder WHY they did that and WOULD THEY revalue again should a protracted recession occur which now seems more likely. I’m not sure 0.04% really matters re Aust Super; stick to fairness, competition, fees and related party transfers in your discussions. but keep it up please, the regulator seems a bit sleepy on this.
the grubby world of industry funds and biased regulators..