Superannuation trustees have revised their policies after the Australian Securities and Investments Commission (ASIC) found a lack of oversight and control measures in relation to investment switching.
ASIC reported its surveillance of 23 trustees in October, finding significant deficiencies in their conflicts management arrangements relating to investment switching.
“ASIC expected to find robust systems in place to prevent directors and senior executives from potentially misusing price sensitive information for personal gain. However, the surveillance revealed a lack of strong oversight in this space.”
In response to the corporate regulator’s concerns, trustees committed to implement a range of changes including:
- Updating or establishing policies and practices to address the deficiencies ASIC highlighted by:
- identifying switching as a potential conflict of interest;
- incorporating steps to prevent inappropriate trading (such introducing blackout periods or trading windows);
- expanding conflicts arrangements to cover trading by related parties of directors and senior executives;
- Increasing board-level engagement so there was greater board oversight, input and direction. For instance, increased monitoring of staff transactions and reporting back to the board, including on switching activity;
- Increasing staff awareness of the policies and their obligations through greater internal communication and training; and
- Undertaking an independent review of the trustee’s broader conflicts management frameworks.
ASIC commissioner, Danielle Press, said, “Appropriate governance is integral to maintaining consumer trust and confidence in the superannuation industry. This is not something you can set and forget.
“Trustees must have conflict management arrangements in place that are continually reviewed and tested to ensure they remain appropriate.”
ASIC also completed its review of a range of transactions during the 2020 calendar year by directors, senior executives or their related parties.
This involved the switching of investment settings, changes to investment contribution allocations and superannuation contributions, and the withdrawal and roll in of superannuation monies.
Based on the evidence obtained during its surveillance, ASIC said it was satisfied no further action was warranted against any individuals in relation to the identified transactions.