ASIC reveals close scrutiny of super industry

The Australian Securities and Investments Commission (ASIC) will narrow in on communication from all superannuation funds, paying close attention to member disclosures, not just those that failed the government’s inaugural YFYS test.

Speaking at the Australian Institute of Superannuation Trustees (AIST) Virtual 2021 Conference, ASIC senior executive leader for superannuation Jane Eccleston confirmed that the regulator will be keeping a close eye on the underperformance notifications addressed to members of funds that failed APRA’s inaugural performance test.

But funds that passed will also be under the regulator’s close watch, with Ms Eccleston announcing ASIC will also be looking for “false, misleading or deceptive conduct” in performance disclosures made by funds that received APRA’s tick of approval.

“Claims about performance that confuse or mislead may give rise to legal consequence or reputation risk and don’t promote confidence in superannuation,” Ms Eccleston said.

Noting that while trustees have a lot to grapple with given new significant obligations and increased scrutiny at a more granular level, Ms Eccleston said that their focus needs to be on the future.

“Focus on enhancing their product value chain, to ensure that the fund’s products and services meet members’ needs. Ultimately, we want to see superannuation funds operate in a way that is transparent, fair for members and promotes confidence in superannuation,” she added.

APRA, too, has confirmed that as well as scrutinising the plans of the 13 funds that failed the test, they will be engaging with trustees at risk of failing the performance test next year, to ensure they take the steps necessary to improve performance and to understand their contingency plans. 

“APRA has intensified its supervision of trustees with products that failed the test and has requested they provide a report identifying the causes of their underperformance and how they plan to address them,” APRA executive board member Margaret Cole said earlier this week.

The results of APRA’s first annual super performance test revealed Australia’s worst 13 funds hold $56.2 billion in investments and almost 1.1 million accounts.