ASIC refused leniency on insurance inside super

The Australian Securities and Investments Commission (ASIC) refused to provide a no-action letter to a superannuation fund which had failed to notify members of the Government’s changes to insurance inside superannuation.

The regulator revealed that it had refused to provide the no-action letter to the superannuation fund “for its failure to provide notices by the required date to members whose accounts had been inactive for a continuous period of six months, detailing the new arrangements that will apply to their insurance within the fund”.

ASIC said the notices had been required under the new legislation which was designed to protect members’ savings in active superannuation accounts from erosion by fees and insurance costs.

“We refused to provide a no-action letter as the notice requirements were specifically enacted to facilitate implementation of the reforms. Any action that may undermine compliance with the reforms may put the superannuation savings of members at risk of continued diminishment from unnecessary insurance costs,” the ASIC explanation said.

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It said that it was also not apparent that a clear regulatory purpose would have been served by providing the letter.