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Underperforming funds warned to improve member communication
The Australian Securities and Investments Commission (ASIC) has issued a warning to trustees of MySuper funds which failed the performance test that they need to be more member-centric in their communications.
The regulator said this was an “area of industry weakness” among trustees and followed a review of member communication by four funds which failed the MySuper performance test for a second time in 2022.
ASIC had previously written to trustees that it expected to fail a second time and set out its expectations about informing members but, following the review, said this guidance had been interpreted differently by different trustees.
It found communication was inconsistent or lacked clarity and there was a lack of cohesive communication put in place.
Other areas for improvement included:
• Providing consistent messaging about performance across the fund website;
• Ensuring that communications about short-term performance, products and mergers are balanced and don’t undermine the fact that the product failed the test; and
• Providing clear call-centre transcripts for staff to discuss the performance failure or product closure and related options with members.
To ensure that members understood the impact of relevant changes, trustees should consider from a members’ perspective what communication members will receive and when.
ASIC commissioner, Danielle Press, said: “Trustees that fail the performance test need to get the balance right in their communications – they need to be transparent and factual about the performance of the failed product.
“‘Our review found that the trustees took into account the guidance provided in our report (REP 729) last year and have made progress. Trustees complied with the mandatory disclosure obligations to notify their members of the failure, and had good processes to ensure that no new members joined the closed products. However, we found that some trustees need to design and deliver performance communications with their current members in mind.”
AUTHOR
Laura Dew
Laura Dew is editor at Super Review. Prior to joining SR, she spent five years working at Investment Week in the UK covering asset and wealth management.
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TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
92.15 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
53.24 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
43.15 3 y p.a(%)
4
DomaCom Shoreline North Coogee
36.26 3 y p.a(%)
5
GAM LSA Private Shares AU I
35.87 3 y p.a(%)
