Australia’s corporate watchdog has shored up its position as the country’s top conduct cop in the superannuation industry, with increased powers to tackle wrongdoing in a toughening regulatory environment.
Speaking at Investment Magazine’s Chair Forum in Victoria on Thursday, ASIC commissioner, Danielle Press said Treasury was working on legislation to clarify the agency’s role as the primary superannuation conduct regulator.
Acknowledging that ASIC has not been particularly active when it comes to conduct in superannuation, Press said that is changing.
“ASIC is now firmly in the superannuation conduct space and we are committed to working with industry to lift standards and improve member outcomes,” she said.
Despite APRA taking the role of prudential regulator and ASIC overseeing conduct, responsibilities between the two have blurred, with the Hayne royal commission adding to the confusion by suggesting “co-regulation” by the two agencies.
At the Forum, Press stressed the importance of providing clarity for trustees where there was a regulatory overlap between ASIC and APRA because their roles were very different.
“We are issues driven, not prudentially driven,” the commissioner said. “We don’t look at each entity every day. We are risk based and focus on areas of key concern from a conduct perspective. We are not going to have individual supervisory teams for each entity.”
The former Equipsuper chief executive said that the corporate regulator was concerned with the relationship between trustees and individual members, whereas APRA was more concerned with the fund and membership.
For example, she said, when it comes to consumer protection and member outcomes, APRA is more focussed on aspects like product design whereas the corporate cop is concerned with conduct aspects like fees.
Even so, Press added that the two regulators work closely together and will coordinate even more in the future. “Where there are problems in industry, we will work out who has the best available tools to address them and support each other.”
She said the two agencies have established a new committee which includes a superannuation and enforcement subcommittee to discuss matters of mutual interest.
Press also confirmed that supervision and surveillance of trustees will increase before returning to the hot button topic of fund underperformance. She said poor performance was not illegal, but it may be a red flag for other conduct that is.
“Trustee obligations are not changing substantially but ASIC has a lot more power to enforce those obligations,” she said. “This will mean different and probably more interaction with us.”
The commissioner stressed that trustees who engage in misconduct or fail to meet the standards can expect to hear from regulator, such as failures to act efficiently, honestly and fairly or a failure to manage conflicts of interest.
Press said the regulator will release a series of reports this financial year looking at superannuation practices in relation to group insurance. It will also challenge trustees to act in the best interest of members in relation to their insurance offerings.
While the regulator noted that some improvements were being introduced through the adoption of the Voluntary Code of Practice, she said “considerable work” still needed to be done in such areas as occupational risk categories in group insurance.
“ASIC will examine models for their use, default category selection, the data and analysis used to inform these choices and the disclosure of these aspects of the product,” she said.
“We will also analyse value for money in insurance in superannuation – analysis of how the industry evaluates value between products and between cohorts.”