The regulator’s guidance issued to trustees yesterday mentioned s68A of the Superannuation Industry (Supervision) Act 1993, which prohibits a trustee or its associates from using goods or services to influence employers to either choose or retain a particular default fund.
The section was changed in April in scope and penalty, increasing ASIC’s powers to take action in relation to employer inducements by trustees.
ASIC commissioner Danielle Press said the amendments mean civil and criminal penalties can be imposed on super trustees who don’t comply.
“Superannuation trustees must understand that providing inducements to employers to influence them in their choice of a default super fund is generally illegal,” Ms Press said.
“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.
“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.”
The crackdown follows a recommendation handed down by the royal commission for changes to be made to S68A, to improve its enforceability and penalties applying for breach of the prohibition.
The Hayne commission found a number of large super trustees were spending significant amounts of time to maintain or establish good relationships with employers or their officers responsible for choosing a default fund for employees.
“We expect the recent changes to the law will ensure that super trustees are promoting their products to employers on their merits, rather than the inducements they can provide,” Ms Press said.
“ASIC’s new guidance will make it easier for them to understand their new obligations, and not engage in potential misconduct.”
