Australia’s super sector ‘poster child’ for poor governance

ASIC chair Joe Longo has hit out at Australia’s $4.1 trillion superannuation sector for its failure to properly service its millions of members, calling it the ‘poster child’ for bad governance.

CANBERRA, AUSTRALIA - NewsWire Photos - February 26 2025: ASIC Chair, Joe Longo appears at the additional Budget Estimates 2024-25 Economics Legislation Committee at Parliament House in Canberra. Picture: NewsWire / Martin Ollman

ASIC chair Joe Longo has hit out at the superannuation sector for its failure to properly service its members, calling it the “poster child” for “what goes wrong when governance fails.”

Speaking at the Australian Institute of Company Directors conference in Sydney on Wednesday, Mr Longo said the sector had seen increasing complaints about its levels of member services, accusing the leadership of some funds of not having “a grip” on their fund’s data and systems.

He said some super fund trustees were failing in their responsibilities.

“Recently, reports of member service failures have become more common,” he said.

“During the past two years, superannuation complaints to the financial complaints authority, AFCA have been high.”

Mr Longo was speaking after the announcement of action against Australia’s largest superannuation fund, AustralianSuper, alleging that nearly 7,000 people suffered financial loss due to delayed processing of death benefit claims between 2019 and 2024.

He said the corporate regulators, ASIC and APRA, had also received complaints about how super funds handled Indigenous members.

Mr Longo said some super fund trustees had been “surprised” when they learned from regulators the extent of the problems in handling death benefit claims.

“The same thing happened when we read to them from their own complaint files,” he said.

He said ASIC’s actions against super funds were “about protecting vulnerable Australians and their families.”

Mr Longon said the problems discovered by regulators were a “demonstration of what can happen when there is not adequate oversight of systems in an organisation.”

He said the problems with some funds arose from “leadership that doesn’t have a grip on the fund’s data, systems and processes.”

“This kind of disconnect is unacceptable in any area of corporate Australia. But in the superannuation sector it is particularly serious, because super literally affects everyone.

“And as custodians of nearly $3 trillion in hard-earned savings, APRA-regulated superannuation funds and their trustees have a clear responsibility to put members – better thought of as their customers – front and centre.”

Mr Longo rejected suggestions that ASIC had had “double standard” in its treatment of industry and retail super funds.

“ASIC’s approach to penalties for misconduct is the same regardless of whether the fund is an industry or retail fund,” he said.

“If a super fund profits by breaking the law, ASIC will seek penalties that are sufficiently high to deter it and others from engaging in similar conduct, regardless of the structure of the super fund.”

He said recent ASIC actions had included fining Aware Super $20m for charging fees for no service, Westpac/BT for $20m for incorrectly charging insurance commissions to members, Colonial First State for $20 million for misleading members, and AustralianSuper was fined $27m.

That action against AustralianSuper, for failing to merge superannuation accounts, was the second-highest penalty to a super fund in the last five years.

He said ASIC would have more to say in a new report on superannuation member services in coming weeks.

“But the industry is the current poster child for what can and does go wrong when governance fails.”

Originally published as Australia’s super sector ‘poster child’ for poor governance