Earlier this week, the Australian Securities and Investments Commission (ASIC) fired a warning shot at superannuation trustees, reminding them that the use of undue influence or ‘improper inducements’ to influence employers when choosing a default superannuation fund is illegal.
The shot came in the form of Information Sheet 241 that highlights the recently-amended s68A of the Superannuation Industry (Supervision) Act 1993.
This is related to recommendation 3.6 from the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services industry’s final report.
In early February, the Government had announced they would act ‘immediately’ on this recommendation to amend the Supervision Act.
“Superannuation trustees must understand that providing inducements to employers to influence them in their choice of a default super fund is generally illegal. The recent amendments mean civil and criminal penalties can be imposed on superannuation trustees who don’t comply with the law,” ASIC Commissioner Danielle Press said.
The regulator also made mention of the fact that the Royal Commission hearings, which took place last year, heard that some superannuation companies had invested a lot in building relationships with employers.
“While employers are not required to consider their employees’ best interests when making decisions on default super funds, their decisions can significantly impact employees’ retirement income and potentially affect their future financial security. ASIC is concerned because employees who are not engaged with their super are particularly vulnerable to negative financial outcomes as a result of poor employer decision-making.”