The Australian Securities and Investments Commission (ASIC) has moved to flex its superannuation regulatory muscle, issuing a formal reminder to superannuation funds that they should not seek to induce employers to nominate them as default funds.
In a guidance note sent today, the regulator has pointed out that such activity on the part of superannuation funds would breach the Superannuation Industry (Supervision) Act prohibiting a superannuation trustee or its associates from using goods or services to influence employers.
In doing so, ASIC made clear that it would be monitoring the nature of communications around the promotion of superannuation funds.
Commenting on the move, ASIC commissioner, Danielle Press said superannuation trustees had to understand that providing inducements to employers to influence them in their choice of a default super fund was generally illegal.
She said recent legislative amendments meant civil and criminal penalties could be imposed on superannuation trustees who did not comply with the law.
Press pointed out that the Financial Services Royal Commission had found that some large superannuation trustees were spending significant amounts to maintain or establish good relationships with employers or their officers responsible for nominating the default fund for employees.
“Reducing improper influences on employer decision-making is critical to addressing potential consumer harms,” she said.
“While employers are not required to consider their employees’ best interests when making decisions on default super funds, their decisions can significantly impact employees’ retirement income and potentially affect their future financial security. ASIC is concerned because employees who are not engaged with their super are particularly vulnerable to negative financial outcomes as a result of poor employer decision-making.”
“We expect the recent changes to the law will ensure that super trustees are promoting their products to employers on their merits, rather than the inducements they can provide. ASIC’s new guidance will make it easier for them to understand their new obligations, and not engage in potential misconduct,” Press said.