Major superannuation fund trustees have found themselves under scrutiny over fee for no service with both the major financial services regulators revealing their pursuit of issues in a joint letter to major funds this week.
The letter from the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) directly asks: “Are the deductions explicitly authorised by members? Are the deductions consistent with the authorisations and disclosures made to members?”
The letter also asks whether the deduction of fees for advice meet the sole purpose test and whether it is in the best interests of members.
It references the fee for no services issues identified by the Royal Commission and then goes on to state: “Separately, we have identified a range of industry practices in relation to trustee oversight, many of which fall below the standard we expect”.
“A number of these matters are the subject of enforcement investigations or actions. This raises concerns about some trustees’ risk governance, capabilities and culture, as well as their ability to appropriately manage conflicts of interest,” the letter said.
“All trustees must have in place strong governance, risk management and oversight processes to ensure that only authorised and appropriate fees and other charges are deducted from members' superannuation accounts.”
“Accordingly, APRA and ASIC expect all trustees to be reviewing the robustness of their existing governance and assurance arrangements for fees charged to members’ superannuation accounts, and to address any identified areas for improvement in a timely manner,” the regulators’ letter said. “We expect these reviews to be substantially completed by 30 June 2019.”