The Australian Securities and Investments Commission (ASIC) has claimed it has seen some examples of communications from third parties such as financial advisers about insurance inside superannuation which “have lacked balance and context”.
In a letter sent to superannuation funds ahead of the Government’s implementation of its new Putting Members Interests First legislation, the regulator specifically referenced advisers and its ability to take action against them.
Under the heading of “Other ASIC Concerns” the letter said: “ASIC has seen examples of disclosure from third parties about the reforms that have lacked balance or context”.
“ASIC can take action against third parties, including advisers, who make misleading statements about the changes. Trustees need to ensure that advisers and others that they interact with are provided with accurate information,” the letter said.
The ASIC letter to superannuation funds has made clear that “communications should be developed with the member’s best interests as a priority” and suggested that members should not be left with the impression that the only option was to retain insurance.
“Trustees should not solely communicate the benefits of one option. In particular, it may be important to explain why ceasing insurance cover may be appropriate,” it said.
It said ASIC had been systematically reviewing a sample of disclosures concerning superannuation funds and the manner in which they handled the earlier Protecting Your Super legislation.
“Our sample included both insurance and inactive low balance communications. A number of trustees have failed to meet the needs of their members in the communications issued to date and we are actively exploring whether enforcement action is an appropriate outcome in some instances,” it said.
“We will continue to review a selection of member communications and anticipate highlighting good and bad examples of these in future public statements.”