Australia’s corporate regulator has invoked the spirit of 18th century Great Britain to warn superannuation funds they will face trouble if they do not learn from member complaints.
Australian Securities and Investments Commission (ASIC) Chair Joe Longo said super played an important role in the economy, but ASIC saw a “great divide” between what could be reasonably expected of funds, and what was found in practice.
He said fund trustees were failing Australians, with ASIC's work laying bare governance challenges, and exposing super trustee board blind spots around data, systems, and processes.
For example, a death benefits review found that even the fastest trustee processed 48% of death benefit claims within three months. The slowest processed only 8% in that time.
Longo said no trustees monitored or reported on end-to-end death benefit claims handling times, nor did they have performance objectives for these times, and many did not monitor how long their open death benefit claims had been going.
He said the next phase of ASIC’s work was to address "board blind spots" with a focus on how trustees learn from and respond to complaints, because no business could thrive without understanding the people it serves.
Trustees must have robust arrangements to oversee how complaints were being handled, to be able to interrogate complaint data and have confidence that systemic issues were being addressed.
Noting that he was recently described as having read the riot act to large super funds, Longo explained this was a reference to Britain’s Era Riot Act of 1715, which permitted an officer of the law to disperse a crowd.
Once the Act had been read, anybody who failed to follow its command was guilty of a felony punishable by death.
“So consider this speech a reminder that ASIC has read the riot act to the super industry,” Longo said in a speech at the AmCham Regulator Luncheon Series in Sydney.
“To the extent that some trustees aren’t across the data, systems, and processes of their funds, they’re failing to live up to that solemn responsibility.
“To that extent, they’re causing more trouble and suffering for their members – their customers.
“And to that extent, there will be trouble – for any trustees who fail to know their business, inside and out, and to act in the best interests of their members.”
