Concerns that superannuation funds may have been using aggressive marketing tactics and inducements to scoop employers’ profitable default fund business have prompted a corporate watchdog to review up to 50 superannuation trustees.
The Australian Securities & Investments Commission (ASIC) will contact the super funds this month through mail, soliciting information about their practices, including insurance arrangements, as part of wider scrutiny into member experience and effective disclosure, Australian Financial Review reported.
ASIC’s latest review follows a warning last year against selecting a default fund for company staff “on the basis of inducement.”
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Inducement has been defined under s68A of the Superannuation Industry Act 1993 to include a range of things such as corporate hospitality and tickets to sporting events, as well as discounts on products or services, the report said.
Speaking about the review, Gerard Fitzpatrick, senior executive leader of investment managers and superannuation at ASIC, told AFR: “We’ll be looking at all of the material around the super fund trustee relationship including the type of marketing collateral funds give to employers.
“We are very interested in how members are treated, and if as a result of aggressive marketing approaches or competitive drive, whether members are being disadvantaged or are being provided with information that does not allow them to make appropriate investment decisions.”
Areas that will come under ASIC scrutiny will include “advice given to employers and how this is paid for, as well as looking at disclosure material that is provided directly for employers by trustees and entities.”
The review, which will also look into insurance arrangements within super, may involve another round of questioning after the letters have been sent, the report said.
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