The major superannuation fund is facing legal action from ASIC after allegedly failing to inform the regulator about investigations into serious member service issues.
ASIC has launched proceedings today in the Federal Court against Mercer Super, based on allegations the super fund had inadequate systems in place to comply with the reportable situations regime between October 2021 and September 2024.
The reportable situations regime requires Australian financial services licensees to promptly report ongoing investigations into significant breaches of their core obligations.
In a public statement, ASIC stated that the Mercer Super allegedly failed to tell ASIC about investigations into serious member services issues, including incorrect insurance premium refunds for dead members, the regulator alleges in new proceedings launched today in the Federal Court.
ASIC said the alleged system failures include Mercer Super failing to report seven investigations at all, and another investigation being reported more than a year late, including investigations into:
- Insurance premiums not being refunded correctly after members had died
- Member accounts not being created with default insurance, and
- Updates to member information not being processed by the trustee.
In its statement, ASIC also alleged that Mercer Super provided false or misleading information in reports to ASIC, which understated the number of members who were impacted.
ASIC deputy chair Sarah Court said the case against Mercer Super was the latest in a series of actions ASIC had taken to drive change in the way trustees serve their customers.
“We allege a pattern of longstanding and systemic failure by Mercer Super to comply with the law,” said Court.
“These aren’t just technical breaches. Allowing investigations into significant issues to drag on for months or, in some cases, over a year without reporting them to ASIC demonstrates a lack of care for customers and can put more at risk.”
As one of Australia’s largest super funds, Court said Mercer Super should have had adequate systems in place to manage and monitor critical issues like this.
“The reportable situation regime is in place to ensure ASIC can identify misconduct early and take action to protect Australians. Customers expect their super funds to abide by the law.,” she said.
Court outlined that member service failures in the superannuation sector is one of ASIC’s 2025 enforcement priorities.
Over the past 12 months, ASIC has sued AustralianSuper and Cbus over alleged failures in handling death benefit and insurance claims. ASIC has also issued 34 death benefit claims recommendations to super trustees and flagged its next phase of work focusing on how trustees respond to customer complaints.
While ASIC is reviewing the reportable situation regime to make compliance simpler for licensees, the Corporate Regulator said Mercer Super’s alleged conduct falls well below what ASIC expects of a trustee of its size and market position.
“There is work underway to review and simplify the regime but that doesn’t mean trustees can avoid their obligations. Mercer Super’s alleged failure to meet those obligations over several years is why we’re taking action,” said Court.
ASIC is seeking declarations and penalties from the Court.
In a statement released today, Mercer Super (Australia) Limited (MSAL) said it acknowledged the ASIC action and was reviewing the claim.
“We have cooperated with ASIC during the investigation of this matter and are currently reviewing the claim,” the super fund stated.
“We note that ASIC has expressly stated in its pleading that it does not allege that MSAL set out to deliberately mislead ASIC in respect of the matters set out in the claim.”
