The Australian Securities and Investments Commission (ASIC) has fired another shot over the bows of superannuation funds over how they communicate with members, using a new report to suggest that some funds may have acted without balance with respect to members retaining insurance inside superannuation.
The new ASIC report (REP 655) was based on an ASIC review of a sample of superannuation funds and found that “several of the insurance cancellation notices we reviewed failed to provide balanced content for keeping and reviewing cover – some were factual but focused only on reasons to retain cover”.
The ASIC report also said trustees had tended to emphasise the ‘value and benefits’ of insurance with some conveying a sense that paying the insurance premiums would have minimal impact on member’s day-to-day financial situation.
“There was little attempt by some trustees to link the changes to the objectives behind the Protecting Your Super reforms, or to emphasise that even if the payment has little impact on a member’s current financial situation, it will have an impact on their retirement savings,” the report said.
The ASIC report also suggested that superannuation funds should be careful about relying too much on their group insurers in communicating with members.
“Trustees should be mindful if they are receiving guidance from group insurers before developing their key messages. Those messages may be consistent with a group insurer’s priorities but not necessarily in members’ best interests,” it said.