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Surveillance of super trustees reveals 'clear failure' to identify personal investment switching

ASIC has revealed surveillance of personal investment switching by directors and senior executives of superannuation trustees has identified conflicts of interests by trustees’ management.

On Wednesday, the corporate regulator confirmed it looked at a sample of 23 trustees and their conduct during “increased market volatility” on the back of the COVID-19 pandemic due to concerns that fund executives were using price-sensitive valuation information for personal gain.

The conflicts of interest identified by ASIC included a failure to identify investment switching as a risk, disparity in board-level engagement and a lack of restrictive measures to limit executives’ ability to switch investment options.

“We expected superannuation trustees to have robust conflict of interest policies that dealt adequately with investment switching, including by their directors and executives. What we found instead was often a clear failure to identify investment switching as a source of potential conflict, resulting in a lack of restrictive measures and oversight to adequately counter this risk,” ASIC commissioner Danielle Press said.

“This is very concerning given the level of sophistication and governance required of trustees when managing millions of dollars in assets on behalf of fund members.”

ASIC said it will consider regulatory action if misconduct causing consumer harm is identified.

Ms Press added that trustees must have “effective” conflicts management frameworks in place to prevent the misuse of information by directors and executives.

“Policies should cover the identification, control, management and regular monitoring of conflicts as well as the consequences for non-compliance,” she said.

“Such protections will help trustees manage the risk that their executives' own interests or those of a related party results in loss of confidence in the fund or in detriment to members.”

ASIC noted that some trustees that do not have frameworks in place will look to implement processes moving forward.

Neil Griffiths

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.

Comments (15)

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  • you are seriously kidding ASIC? - they "play" with members' money for their own gain - such a total surprise. The bigger issue is the member's money is moved around changing risk metrics - oh sorry - they don't have risk metrics or clients' consent. So something like standard deviation, Sharpe ratio, and value @ risk, are entirely foreign concepts. Fair call when you don't think that the punter has any right to know what s happening. All aboard the bus - because you can trust us - with my lifes' retirement savings
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  • If this was AMP, NAB, Commbank etc they would have this all over the news... they don't even name the super funds most likely about 15 of them are industry funds
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  • If the directors had their money in the same investments but with different supers they would have probably gotten away with it...... just sayin GP
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  • So the cost of this little non sherade wil be charged to advisers, while the trustees pocket their ill gotten gains
    3
  • Did ASIC and Josh Frydenberg invoice financial planners for this investigation?
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  • I didn't see any consumers impacted by Dover when they made reference to having PI Cover but ASIC destroyed them and here they're saying they'll act only if there's a detriment. The other issue is......No names so we can only assume they're ASIC mates being Industry Super Funds. A culture of "only" $1.50 per month in fees we can do and say anything.....They're pretty quick to push away consumers into the hands of Accountants/ Tik Tok and help destroy my business by naming & blaming advisers but so silent now. As someone working in the Finance Industry for 30 years pretty confident with describing ASIC as a combination of corrupt and incompetent.
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    • one better - ASIC is populated with Card-carrying members of the labor party - Medcraft for example.
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  • "ASIC said it will consider regulatory action if misconduct causing consumer harm is identified"
    Does this mean Insider trading will also be OK in the future?
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  • Yes but if that was an adviser they would be prosecuted
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    • Is this not or at least verging on insider trading
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      • Looks like it, smells like it, ASIC it appears is confirming it did actually happen, but it is ASIC and Industry Super I believe that makes it all OK - at least that's how it looks and smells.
        Probably very little chance the Media will make anything of it or risk the rivers of advertising revenues?
        Australia - the lucky country I guess - what a mess.
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      • Its front running, so it is insider trading.
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  • Everyone knows the union fund trustees and senior executives switched to avoid price changes throughout the pandemic. Apparently ASIC has somehow stumbled across the obvious, it's amazing what you can do we you actually ask some questions of their union fund mates. So other being concerned what are they going to do about it? Could you image the press release if it was an adviser doing anything like this.
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  • Surprise surprise. It will somehow be the fault of financial planners.
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