ASIC’s Longo denies superannuation double standards

The Australian Securities and Investments Commission chair, Joe Longo has denied the regulator is guilty of double standards when dealing with industry and retail superannuation funds.

On the same day in which ASIC announced it was pursuing AustralianSuper in the Federal Court over death benefit claims handling shortcomings, Longo said “ASIC’s approach to penalties for misconduct is the same regardless of whether the fund is an industry or retail fund”.

“The legal principles are well-established. The primary purpose of civil pecuniary penalties is to deter future misconduct. If a super fund profits by breaking the law, ASIC will seek penalties that are sufficiently high to deter it and others from engaging in similar conduct, regardless of the structure of the super fund,” he said.

“That’s why Aware Super was fined $20 million for charging fees for no service, Westpac/BT was fined $20 million for incorrectly charging insurance commissions to members, Colonial First State was fined $20 million for misleading members, and AustralianSuper was fined $27 million – the second-highest penalty to a super fund in the last five years – for failing to merge multiple superannuation accounts,” he told a Sydney conference.

Longo emphasised that the instances all pointed to the need for superannuation fund trustees to know and understand their business.

“All of these are examples of not knowing your business. Not taking the time to be ‘plugged in’ and connected. At the heart of this issue is leadership that doesn’t have a grip on the fund’s data, systems and processes – and the customers who suffer for it,” he said.

“This kind of disconnect is unacceptable in any area of corporate Australia. But in the superannuation sector it is particularly serious, because super literally affects everyone.

“And as custodians of nearly $3 trillion in hard-earned savings, APRA-regulated superannuation funds and their trustees have a clear responsibility to put members – better thought of as their customers – front and centre,” Longo said.

“Let me put it plainly: The governance challenges facing this sector relate to the foundational duties and expectations of directors,” he said.

“We’re not talking about anything new here – we are talking about well-established principles of governance and responsibility. Which is why, when I say that some super trustees are failing Australians in a critical service, it should be a warning to all directors not to let their fundamental duties slip.”

“We will have more to say in a new report on superannuation member services in coming weeks, but the industry is the current poster child for what can and does go wrong when governance fails.”