The Federal Court has ordered Mercer Super to pay $10.3 million in penalties after finding the fund failed to properly report investigations into significant member service issues to ASIC, including an investigation into insurance premiums continuing to be charged after members had died before being refunded.
The judgment found Mercer Super’s systems for complying with the Corporations Act’s reportable situations regime were inadequate between October 2021 and September 2024, resulting in multiple investigations either not being reported to the regulator or reported late.
The Court found Mercer Super failed to notify ASIC of seven reportable investigations and lodged another report outside the required timeframe.
It also found the trustee failed to take all reasonable steps to ensure one report was accurate, providing false or misleading information that understated the number of members affected.
Among the investigations that were either not reported or reported late were failures to update member accounts that resulted in members paying higher fees and receiving less favourable insurance policies, delays in allocating $64 million of member funds, and failures to provide eligible members with death and total and permanent disability insurance cover.
ASIC chair, Sarah Court, said the shortcomings reflected systemic weaknesses that were unacceptable for one of Australia’s largest superannuation funds.
“These failures undermined a critical safeguard designed to protect consumers and exposed fundamental weaknesses in Mercer Super’s systems and processes.
“This was not an isolated oversight. It was a sustained systemic issue that continued for years after the regime was introduced, which is unacceptable for a fund entrusted with $80 billion worth of retirement savings for more than a million members.
“When investigations into serious member service issues are not reported to ASIC as required by law, this can allow problems impacting members to persist unchecked, increasing the risk of ongoing harm.
“The Court’s decision sends a strong message to the superannuation sector that accurate and timely reporting is not optional and when a fund falls short, we will take action.”
In her judgment, Justice Catherine Button found ASIC’s supervisory role had been seriously compromised because of the duration of the investigations Mercer Super failed to report.
Her Honour also found the trustee had been on notice that its compliance systems were inadequate and that there was a risk investigations were not being identified and reported to ASIC as required.
The reportable situations regime is designed to give ASIC early visibility of potential misconduct, ensure licensees prioritise investigations and remediation, and improve transparency across the financial services sector.
The proceedings form part of ASIC’s broader effort to lift governance standards across the superannuation industry, with holding trustees to account for member service failures identified as one of the regulator’s enforcement priorities for 2026.
Mercer Super is Australia’s seventh largest superannuation fund by membership, with more than one million members and almost $80 billion in assets under management.
In a statement provided to Super Review, a Mercer Super spokesperson stated: “Mercer Super acknowledges and apologises that it fell short of its obligations under the reportable situations regime.”
“The agreed facts submitted to the Federal Court shows these shortcomings were not deliberate and that Mercer Super did not financially benefit from them. There is no allegation of financial or non-financial loss to members in relation to this matter.
“To address the issue, we have made important investments across Mercer Super, putting in place additional personnel, and improving our processes, systems, and technology.
“The penalty will be paid by Mercer and not by the super fund or its members.”
