The Australian Securities and Investments Commission (ASIC) has issued a stern warning to superannuation platform trustees after a report it compiled found persistent failures to protect retirement savings.
ASIC’s “Report 833 Safeguarding super: How well are platform trustees monitoring risks to retirement savings?” reviewed six platform trustees overseeing a combined $300 billion in retirement savings and uncovered gaps in the monitoring of harmful advice fee deductions, unusual fees and investment patterns, and high-risk superannuation switching activity.
“It’s clear some trustees are not doing enough to protect their members, despite repeated warnings from ASIC and APRA (Australian Prudential Regulation Authority) about the dangers of poor oversight. Nor have they learned lessons from the collapses of the Shield Master Fund and First Guardian Master Fund,” ASIC commissioner Simone Constant said.
Constant highlighted “one disturbing case” of a trustee who failed to take further action for 13 months after becoming aware of suspicious activity from a representative of an advice licensee.
“Many of the clear gaps in oversight are deeply concerning and difficult to justify,” he noted.
The corporate watchdog identified four areas that required immediate attention from trustees: persistent gaps in advice fee controls, limited checks of advice documents, insufficient focus on understanding the advice licensees’ business models and inadequate monitoring of key risk indicators.
Report 833 also includes a list of six calls to action across key focus areas, which include fee caps, onboarding, monitoring advisers and licensees, and monitoring fees and investment and member flows.
Acknowledging the regulator’s report, the Financial Services Council (FSC) said the platform sector takes its role seriously as the steward of Australians’ superannuation savings and many of ASIC’s calls to action are formalised in “FSC Standard 31 Wrap Superannuation Platform Trustee Investment and Adviser Governance Principles: Standard and Better Practice Guidance”, which commences tomorrow.
“ASIC’s report reinforces the importance of strong governance and aligns with the direction the platform sector is taking through the FSC’s Standard and Better Practice Guidance. The FSC standard will continue to be reviewed and updated as risks and regulatory expectations evolve,” FSC chief executive Blake Briggs explained.
Association of Superannuation Funds of Australia (ASFA) chief executive Mary Delahunty also welcomed the ASIC report.
“ASFA will continue to work across the super system and alongside our platform members to ensure the required improvements are made,” Delahunty said.
