ASIC issues warnings on super, pandemic payments

ASIC has put the super industry on notice it is aware of allegations more funds blocked attempts to transfer balances.

ASIC deputy chair Karen Chester speaks during a Parliamentary Joint Committee. Picture: AAP Image/Lukas Coch.

The corporate regulator has signalled it is looking at more super funds that have attempted to dissuade members from changing trustees, allegedly in breach of the law.

Speaking to the House Economics Committee, members of the Australian Securities and Investments Commission said the regulator was looking at the issue in the wake of explosive allegations lobbed at REST.

ASIC also revealed it had put businesses on notice as part of its attempts to improve annual reporting to fully disclose the dollar sums of government assistance received under JobKeeper or other schemes.

Committee chair Tim Wilson questioned ASIC as to whether it was aware of allegations AustralianSuper had blocked attempts to roll over accounts.

“We regularly ask super funds questions and many of them give us very opaque answers,” Mr Wilson said.

ASIC deputy Chair Karen Chester told the committee she was aware of historical actions by unnamed funds to prevent members transferring to new funds but was not aware of any funds currently under formal investigation.

ASIC aimed its sights on REST at the start of March, alleging it had made false or misleading statements to its members seeking to transfer out of the fund.

The corporate regulator alleged REST padded its balance sheet by holding on to thousands of member accounts after telling those members they were required to hold a remnant $5000 balance.

ASIC also alleged REST benefited from at least $14.8m in funds retained from 1,143 members whose full balance rollover requests were refused or only partly completed.

The corporate regulator was also questioned by the committee on the progress of several other investigations underway, including warnings issued to businesses over the JobKeeper scheme.

ASIC commissioner Catherine Armour said the regulator was examining whether businesses had attempted to obfuscate total JobKeeper payments amounted to “problematic” behaviour.

“We’ve been very clear to firms that we are looking at that in our review of financial reports,” she said.

“At this stage I am not aware we have any particular concerns with any particular firm.”

The regulator also vented its frustration about the behaviour of the insurance industry in the wake of the COVID-19 pandemic, noting it was displeased with delays in arriving at an answer on questions of coverage.

Deputy Chair Chester said the current situation which had seen insurers selling policies to businesses referencing defunct legislation and exposing the industry to billions in claims reflected the failure of the industry to manage complexity.

“We were very frustrated with the breadth of the first test case and the second test case and the time it took to be filed,” she said.

“The insurer just did not have the systems in place to update the policies such that they’ve exposed themselves to claims they did not have insurance for.”