ASIC warns super funds over lack of scam regime

The Australian Securities and Investments Commission (ASIC) has fired a shot over the bows of superannuation funds after identifying significant weaknesses in funds’ anti-scam regime.

In an open letter to the superannuation funds, ASIC outlined what it sees as “weak trustee practices relating to scams and fraud”.

“Our recent review of trustees’ practices in preventing, detecting and responding to scams identified several areas of weak trustee practices,” the letter said.

“The review distinguished between fraud (or unauthorised transactions) and scams. In the case of a scam, a member has been tricked into either:

• transferring funds out of their superannuation account to a scammer, or
• aiding a scammer to make a transfer (e.g. by providing a scammer who may be “impersonating the superannuation fund with a one-time password).

The review found that trustees were overly reliant on anti-fraud measures and had limited focus on the specific risks and harms associated with scams. For example, they focused on confirming that the person requesting a transfer was the member rather than looking for flags to indicate that the member may have been tricked.”

“We found that trustees did not have sufficient oversight of their external administrators’ anti-scam and anti-fraud practices,” it said.

“For example, in our engagement with trustees, they frequently referred in general terms to their administrators’ systems and processes, but sometimes lacked knowledge about key details. One of the trustees we engaged with was unable to identify whether its administrator undertook basic interventions, such as engaging with members over scams.”