The corporate regulator has found failure in superannuation fund identifying conflicts of interests with superannuation trustee directors and senior executives regarding personal investment switching based on their knowledge of timing of the revaluation of unlisted assets.
An Australian Securities and Investments Commission (ASIC) surveillance looked at 23 trustees from industry and retail funds during the increased market volatility that stemmed from the COVID-19 pandemic.
ASIC said the surveillance revealed conduct fell below its expectations.
ASIC commissioner, Danielle Press: “We expected superannuation trustees to have robust conflict of interest policies that dealt adequately with investment switching, including by their directors and executives. What we found instead was often a clear failure to identify investment switching as a source of potential conflict, resulting in a lack of restrictive measures and oversight to adequately counter this risk.
“This is very concerning given the level of sophistication and governance required of trustees when managing millions of dollars in assets on behalf of fund members.”
ASIC said some trustees did not have oversight processes in place for investment switching by their directors and executives at the time of the surveillance but since indicated that they were looking to implement such processes moving forward.
“Trustees must have effective conflicts management frameworks to prevent the misuse of such information,” Press said.
“Policies should cover the identification, control, management and regular monitoring of conflicts as well as the consequences for non-compliance. Such protections will help trustees manage the risk that their executives' own interests or those of a related party results in loss of confidence in the fund or in detriment to members.”
ASIC’s key concerns with trustees’ management of conflicts of interest included:
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