ASIC Chair James Shipton has laid the groundwork for the regulator to play a far more activist role in overseeing the superannuation industry.

In a speech to the Financial Services Council Summit, he spoke of “deficit trust” facing the finance sector, including superannuation, and, consequently, the regulator would “heighten its scrutiny” of Australia’s retirement income system.

“There are boundaries to ASIC’s jurisdiction in super, and some issues will be in the remit of other regulators. But we plan to do everything within our powers to improve member outcomes in superannuation.

“Our interest in superannuation is broad, touching many sectors and is concerned with many issues, including those relating to trustees, financial advisers and distributors, with a particular focus on achieving good consumer and member outcomes in superannuation.”

Shipton cited some recent examples of ASIC’s enforcement role in superannuation, including:

• Court enforceable undertakings from CBA and ANZ relating to superannuation product distribution practices;
• Awaiting judgment in ASIC’s civil penalty proceedings against Westpac’s superannuation subsidiaries arising from their telephone campaigns targeting fund members; and
• Securing infringement notice penalties for false and misleading statements in marketing by superannuation trustee Tidswell and promoter Spaceship.

He also delved into the SMSF sector, highlighting reports that illustrated where this superannuation sector was falling short of the mark.

• Report 575 showed that 91% of SMSF files reviewed did not comply with the applicable financial adviser obligations;
• Report 576, on member experiences with SMSFs, showed many members did not fully understand what is involved with running their fund. In addition, some were using the structure solely as a vehicle to get into the property market without a wider investment strategy; and
• Report 562 looked at advice about superannuation platforms. ASIC will pursue remediation for customer losses resulting from poor advice about these products.

“There is more to come. We will shortly be releasing our Insurance in Super report, and we have further work on Employers and Super as well as in relation to Total and Permanent and Disablement Insurance. We are also planning a project looking at personal advice provided by superannuation funds.”

Shipton told the FSC members that superannuation sector consumers “had no choice” but to entrust their money to them.

“As a result, your responsibilities to your investors specifically, and the community more generally, are amplified – and rightly so.

“To be blunt, there has been too much focus in many parts of the superannuation sector on exploiting opportunities to make money from Australians instead of focussing on the responsibilities that come from being the custodians of other people’s money. This must change.”