ASIC reported that the court found between October 2021 and September 2024, Mercer Super’s compliance systems, especially around reportable situations in relation to the Corporations Act, were inadequate.
The regime requires Australian financial services licensees to promptly notify ASIC of investigations into potentially significant breaches of their core obligations.
“The Court also found that Mercer Super failed to report seven reportable investigations to ASIC at all and it reported another investigation late,” the regulator said.
“In relation to the investigation that was reported late to ASIC, the Court found that Mercer Super failed to take all reasonable steps to ensure the reports to ASIC were accurate and provided false or misleading information which understated the number of members impacted by the incident being investigated.”
The investigations Mercer Super either failed to report on time, or did not report at all, related to a failure to update member accounts that resulted in members paying higher fees and receiving less favourable insurance policies, a delay in allocating $64 million in member funds and a failure to provide eligible members with death and total and permanent disability insurance cover.
ASIC chair Sarah Court said the systemic deficiencies identified were unacceptable for a superannuation trustee of Mercer Super’s size and market position.
“These failures undermined a critical safeguard designed to protect consumers and exposed fundamental weaknesses in Mercer Super’s systems and processes,” she explained.
“This was not an isolated oversight. It was a sustained systemic issue that continued for years after the regime was introduced, which is unacceptable for a fund entrusted with $80 billion worth of retirement savings for more than a million members.”
She added when investigations into serious member service issues are not reported to ASIC, this allows problems impacting members to persist and fester unchecked, increasing the risk of ongoing harm.
“The Court’s decision sends a strong message to the superannuation sector that accurate and timely reporting is not optional and when a fund falls short, we will take action.”
In delivering the judgment, Justice Button found ASIC’s supervisory role had been seriously compromised by the length of the investigations Mercer Super failed to report.
The court also found Mercer Super had been on notice that its compliance systems were inadequate and that there was a risk investigation were not being identified and reported to ASIC as required.
This comes at a time of increased scrutiny for the superannuation and retirement advice sectors, with the Super Members Council calling for greater restrictions on super switching practices, citing a $1.1 billion surge in advice fees being deducted from super accounts.
According to SMC research, just five super platforms accounted for $815 million of the increase in fees, arguing this demonstrated the need for stronger consumer protections, including more robust trustee oversight of advice fee deductions, greater fee transparency and caps on advice fees to ensure they remain reasonable and proportionate.
