ASIC Seeks Improved Compliance by Super Trustees and Responsible Entities

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By Mark Bland, Partner

ASIC issued a media release this week presenting an overview of compliance issues identified in its surveillance of superannuation trustees and responsible entities. Key themes are advertising, governance, record keeping and broader misleading or deceptive conduct.

For superannuation trustees, there is a strong theme of misleading or deceptive conduct, including a restatement of ASIC’s robust view that advertising must contain “balanced messages about product risks and benefits”. It is no wonder that trustees have resorted to people making cryptic hand signals or throwing colourful paint at a wall instead of talking about their product.

More interesting, however, is ASIC’s concern about trustee behaviour in the turf war for high balance members. ASIC warns against likening an investment option, providing access to underlying securities, to a self managed superannuation fund. ASIC has issued a number of infringement notices on both sides of the fence (advisers and trustees) on SMSF related advertising. Trustees need to be very careful about their member retention strategies as competition hots up for superannuation dollars.

On the subject of advertising, it is not unusual for lawyers to be a mere interim step in the approval of marketing collateral, with the final stamp of approval sitting in “Marketing”. Sometimes this hierarchy emerges because of a lack of a process. ASIC makes clear its expectations: “ASIC expects licensees to develop, maintain and comply with documented processes dealing with the authorisation and review of promotional materials.”

Advertising is also a theme for responsible entities, but governance is a stronger one. It is fair to say that APRA’s prescriptive requirements on governance has led to APRA regulated entities being more advanced on governance and risk than those only regulated by ASIC. Responsible entities would be well served by looking over the fence at this sector to see what is coming their way.

This media release is a report on ASIC’s surveillance activities last financial year. Of greater relevance is ASIC’s Corporate Plan for the next three years, which was published in August. ASIC has turned its ‘behavioural insight’ approach from the consumer to the ‘gatekeeper’. ASIC plans to test the best indicator of how a business behaves – “culture”. We will explore this subject and what it means for financial services providers in a subsequent article.

For further information, please do not hesitate to contact us.

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    Financial Services

    RegTracker 21 March 2022