ASIC warns ‘failed’ super funds on member communications

Some superannuation funds which fail the annual performance test are also falling short on telling their members about their failure, according to the Australian Securities and Investments Commission (ASIC).
ASIC has conducted a review of member communications on the part of funds failing the test and has found that while there have been improvements, some funds need to take a more member-centric approach.
ASIC’s review found that some trustees took a reactive approach to performance test communications or significant events such as mergers and did not have cohesive communications strategies in place.
It said this meant that their communications to members were inconsistent or lacked clarity. To ensure that members understand the impact of relevant changes, trustees should consider from a members’ perspective what communication members will receive and when.
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.
Prior to the review, ASIC wrote to the trustees that appeared likely to fail a second time, and set out expectations about updating product disclosure statements and issuing significant event notices. ASIC observed that trustees interpreted these obligations differently and provided feedback to them on this and other areas for improvement.
Trustees and products that failed the 2022 performance test:
Trustee | Fund | MySuper Product |
BT Funds Management Limited | Retirement Wrap | BT Super MySuper |
BT Funds Management Limited | Retirement Wrap | Westpac Group Plan MySuper |
Equity Trustees Superannuation Limited | AMG Super | AMG MySuper |
Energy Industries Superannuation Scheme Pty Ltd | Energy Industries Superannuation Scheme – Pool A | Balanced (MySuper) |
SCS Super Pty. Limited | Australian Catholic* Superannuation and Retirement Fund |
Performance tests after a raging bull market that rewarded momentum and risk taking. Rubbery performance based on self valuation of unlisted assets and no standard version of a balanced fund. Could the regulators be more incompetent. Please hire someone who understands how investing works.
Agreed, the current test will only incentivize greater allocation to unlisted assets and manipulation of their valuations to avoid a fail. I fully expect a large fund to fail and be exposed as a pseudo ponzi scheme using contributions to pay out members and shield actual performance figures. Of course if it did happen the government of the day would likely bail them out and a whole new moral hazard within super will emerge.
Agree.
Netflix are possibly already working on this as a follow up on the Berrnie Maddoff story…