The Australian Securities and Investments Commission (ASIC) has confirmed that a number of superannuation funds have been falling short on their obligations to provide transparent information around product disclosure statements (PDS) and how much they are actually paying their trustees.
ASIC said it had intervened in relation to 21 superannuation funds, representing 15 per cent of the so-called “trustee population” with respect to failings under the Transparency Information (TI) elements of the Superannuation Industry (Supervision) Act 1993 requiring funds to disclose information on a website and keep it up to date at all times.
ASIC did not reveal whether the funds were industry funds, retail funds or small Australian Prudential Regulation Authority (APRA)-regulated funds, however it represents the second significant regulatory fail by superannuation funds with the regulator last Friday detailing the findings of its member experience in superannuation project entailing a harsh overall judgement, referring specifically to “a lack of adequate upfront and ongoing disclosure to members about insurance coverage” and “the use of inappropriate defaults when transferring members between different divisions of funds”.
In its most recent report, the regulator said that 21 super fund websites had been identified as failing to meet TI requirements, and that two of those funds had assets exceeding $10 billion.
The transparency deficiencies identified in ASIC's review comprised:
- No super fund website (10 funds);
- No TI on the fund website (four funds);
- No remuneration information (five funds); and
- Remuneration disclosed in bands, rather than for each individual executive officer (two funds).
ASIC’s actions saw seven superannuation funds wound up after their members had been transferred to another fund.
According to the ASIC analysis, seven trustees disclosed the required information, five made it easier to find the information, and trustees of two small funds, who did not have websitesm, sought relief from the TI obligations.
Commenting on the enforcement action, ASIC deputy chairman, Peter Kell said the economic significance of superannuation meant that information about the superannuation industry should be transparent, both for fund members and gatekeepers such as analysts, advisers and journalists.
“ASIC's expectation is that super fund websites should be easily found by searching on the fund's name using an Internet search engine and that the website homepage should prominently point to the Transparency Information,” Kell said.