The Australian Securities and Investments Commission (ASIC) has highlighted some funds which failed the performance test may have risked misleading members about performance.
Funds which failed the annual performance, which was in its first iteration last year, were required to notify their members of the underperformance. There were 13 MySuper funds which failed the test last year and all but three of them had since merged or planned to do so.
ASIC subsequently conducted a review of how those funds communicated this.
ASIC said: “The review found that trustees whose products failed generally complied with the legal obligations to notify their members of the failed test and to disclose the failed test on their website. However, the communication strategies of some trustees may have risked confusing or misleading members about their product’s performance”.
Areas of concern included:
- Publishing the MySuper product’s failure of the test on a webpage less likely to be visited by persons interested in the product;
- Highlighting other performance measures that were more favourable, such as recent positive past performance figures; or
- Criticising aspects of the test to suggest it was not relevant to the particular product.
ASIC commissioner Danielle Press said: “Trustees should act in their members’ best financial interests by being transparent about the performance of their product. They should communicate their performance test results to members in a balanced, clear and factual way.
“Communication strategies that don’t prominently disclose the test result or obscure the importance of a failed result in some way are not acceptable.”