A review by the Australian Securities and Investments Commission (ASIC) of 12 superannuation trustees found all but one failed to ensure their practices or disclosure aligned with their obligations in dealing with member funds.
The regulator has called on super trustees to ensure they meet legal obligations for dealing with incoming money from consumers if a new or increased interest in a super product cannot be issued by the next business day.
“As financial product providers, trustees are required to safeguard incoming monies for products in prescribed ways,” said ASIC commissioner, Danielle Press.
“This is to protect a consumer’s money until the product is issued to them or they receive an increase in an existing product.
“While no significant individual member impact was identified in our review, we were very concerned to find the trustees hadn’t given enough consideration to these important obligations, in some cases for decades, potentially putting members’ money at risk.”
Following the review, all trustees with deficiencies took action of some kind, including paying remediation, notifying ASIC of a reportable situation, implementing changes to deal with application monies to become compliant, or improving disclosures.
“We expect trustees and other product issuers to take these obligations seriously. Trustees should thoroughly review their arrangements for dealing with members’ money before a product is issued as well as those of their service providers,” Press said.
Among the four main issues identified were trustees using an account that did not meet the requirements for some or all of their superannuation products; not retaining a member’s money on trust in a compliant bank account until the time an interest in a product was issued or increased; inadequate disclosures to consumers; and failing to identify money subject to requirement of section 1017E of the Corporations Act.
“Where we identify poor progress by trustees in changing their processes within a reasonable time, ASIC will consider appropriate regulatory action,” Press said.
The regulator had raised these concerns with the trustees and communicated with major auditing firms and industry bodies on how to assist with identifying and addressing compliance issues.
