ASIC warns super funds to come clean on MySuper failure

ASIC will be closely watching how super funds handle failing the 2022 MySuper performance tests after several attempted to bury their 2021 results.

ASIC will be closely watching how super funds handle failing the 2022 MySuper performance tests after several buried their 2021 results.

At least two superannuation fund providers were told to correct the record after they were picked up in a review of performance test disclosure failures by the corporate regulator.

The Australian Securities and Investments Commission initiated a study of how super funds responded to their failure of the Australian Prudential Regulation Authority’s heatmap performance measures.

Funds which failed the test were required to notify members and carry notices of their failure.

ASIC raised issues about the funds fudging failures as the next round of superannuation performance tests approach.

The regulator found most trustees who failed “generally complied” with legal obligations to tell members their result.

However, ASIC found several trustees “may have risked confusing or misleading members about their product’s performance”.

In particular, ASIC was concerned about super funds publishing the notice of the failure on parts of their website many members would not visit, or criticising aspects of the test to suggest it was not relevant to the particular product.

ASIC found 13 MySuper products from 12 super trustees, holding $56bn in assets, failed its performance tests in 2021.

The funds which failed the MySuper test included AvSuper, BOC Gases, the BY Funds Management administered ASGARD Independence Plan Division Two and Retirement Wrap, Christian Super, Colonial First State FirstChoice, Commonwealth Bank Group Super, AMG Super, Energy Industries, LUCRF, Maritime Super, Australian Catholic Superannuation and Retirement, and the Victorian Independent Schools Superannuation.

AvSuper was found not to have properly disclose its failure, after putting up a banner encouraging members to read more about Your Future Your Super.

ASIC requested the fund update its website. An AvSuper spokeswoman said the fund had “communicated consistently” with its members and stakeholders since it failed the test.

“This included four webinars, emails, comprehensive information on the AvSuper website, and letters all done in compliance with regulatory requirements,” she said.

LUCRF was also reprimanded after burying its failure under its website’s governance page.

In the wake of the performance test failure, several funds including LUCRF have merged. It merged with AustralianSuper in June. Funds which fail the test for a second time will be barred from taking new members.

ASIC commissioner Danielle Press said the performance tests of MySuper products were aimed at ensuring transparency and superannuation trustees should reflect that in their messaging to members.

“Trustees should act in their members’ best financial interests by being transparent about the performance of their product,” she said. “They should communicate their performance test results to members in a balanced, clear and factual way.”