Key points
- Driving better retirement outcomes and member services is a strategic priority for ASIC. Ensuring accountability of superannuation trustees will be a significant focus for us over the next year.
- We have written to the CEOs of every APRA-regulated superannuation trustee, urging industry leaders to act now to improve their oversight of death benefits. We are concerned the metrics being used to track death claims handling and processing are too sparse to drive accountability.
- We have also reminded senior executives that they will become accountable persons under the Financial Accountability Regime from next March, which will be an important step in helping us ensure there is top-down accountability in superannuation funds.
Good morning.
Before I begin, I’d like to acknowledge the Traditional Owners of the land on which we meet today, the Gadigal people of the Eora nation, and pay my respects to Elders past and present.
I would also like to congratulate ASFA on another successful annual conference, and on your longstanding leadership in lifting retirement outcomes for Australians.
Today marks one year since I commenced my five-year term as an ASIC Commissioner. It feels significant to open my anniversary here with you today because so many of my conversations over the past year – with APRA, industry, and customers and consumers – have been about ensuring Australians can plan for and participate in their retirement with confidence.
We welcome today’s announcement from the Treasurer as a continuation of those conversations and look forward to stepping up our focus on superannuation, retirement income, and retirement expenses.
Confident and informed participation in the economy is our goal at ASIC. We want superannuation to deliver for Australians at every age and at every stage. You need to help your members build their wealth whilst they work and service them as customers so they can confidently enjoy it, right through retirement.
In the age of ageing, this is no small challenge. There are six million Australians currently at or above superannuation preservation age and we expect a retirement wave of another three million to join them in the next decade[1].
Many of these Australians have contributed to super over their entire working lives but rarely interacted further with their fund until a lifechanging moment – such as leaving the workforce, ill health, or the loss of a loved one.
It’s why I often refer to them not as members but as customers – because in these moments, they expect a certain level of customer service from you.
But despite being able to forecast the demands of this wave a generation in advance, our superannuation system appears to be struggling under the weight of these expectations. And it is certain that the waves will continue.
In recent research conducted for ASIC, we found that less than half of Australians trust superannuation funds to do the right thing by their members. The remainder were either neutral or explicitly didn’t trust their funds. This is a big problem when we’re thinking about confident and informed participation.
For this reason, driving better retirement outcomes and member services is a strategic priority for ASIC. The two are inextricably linked – you can’t have good retirement outcomes without good member services.
And providing good member services can come down to three really simple principles: being transparent, being accountable, and meeting the fair expectations of your members consistently.
I want to focus in particular on the second of these principles today, because ensuring accountability of superannuation trustees is a significant focus for ASIC over the coming days, weeks, and months.
Death benefits
Last week, we commenced proceedings against United Super – the trustee for Cbus – for unreasonable delays in processing claims for total permanent disability (TPD) and death benefits.
We allege this systemic failure impacted more than 10,000 members and claimants at their most vulnerable time, with many claims taking more than 12 months to resolve.
Following this action, today I am calling on every superannuation industry leader to improve their oversight of death benefits, as a matter of urgency.
Yesterday, I wrote to the CEOs of every APRA-regulated superannuation trustee outlining significant concerns about the way some trustees are tracking processing times for death benefit claims and managing their processes.
These concerns have come out of our surveillance on death benefit claims handling, on which we will publish a full report early next year.
We’re writing to CEOs about this now though because some gaps need action now. This is too important to wait.
In particular, we are concerned that metrics are tracked too sparsely overall to drive accountability for these important outcomes; also, that the metrics trustees are using to track death benefit claims don’t capture this process end-to-end, and don’t reflect the real experiences of people out there dealing with loss.
We’re talking about husbands and wives, brothers and sisters, parents and children, who need a way forward after the worst day of their lives.
From their perspective, the clock starts the moment they contact you about the loss of their loved one and stops when the claim is paid.
Yet for whatever reason, some trustees are starting the clock when a package of documents is sent or when all completed applications are received.
Metrics like this do not reflect the fair expectations of your members and their families – and don’t help boards make good decisions either.
Customer-centric metrics are an opportunity to understand where your processes are falling down and how you can fix them.
For example, how will you know if grieving family members can’t meet your documentation requirements if you only track how long it takes you to make a final decision?
In their eyes, it doesn’t matter how quickly this decision is made if it takes 18 months to gather all the right paperwork.
Some trustees have invested time and resources into improvements in the area. Others we looked at in our member services surveillance however were actually surprised when we presented them their own data on end-to-end claims handling. This is the wrong reaction.
Accountability means owning actions and outcomes. It means admitting when you have fallen short and taking steps to measure up. You can’t measure up without data and metrics to measure.
It is our obligation to do all we can to enforce the law when boards of trustees do not meet theirs. This remains the case even when service delivery arrangements are outsourced. Indeed, circumstances may mean metrics and measurement are even more important when third parties undertake operations on your behalf. However you arrange your service delivery, you are always accountable from trustee director through to your end member.
Today I would also like to remind you that from next March, senior executives will become accountable persons under the Financial Accountability Regime. That means that leaders will personally be on the hook for certain responsibilities within their remit.
Clearly, you cannot outsource your FAR accountability, so if you accept those accountabilities make sure you have the tools of responsibility – including the necessary information – to meet them.
This will be a significant step in ensuring there is top-down accountability to members in superannuation funds.
Private markets and best financial interest duty
In lifting accountability – and transparency – across the superannuation sector, I am pleased that ASIC and APRA have a complementary role and are very much aligned.
We share regulatory responsibility for private assets in superannuation. With ASIC’s current focus on driving consistency and transparency in private market investments, we have an ongoing dialogue about APRA’s work around valuations of unlisted assets held by superannuation funds.
Currently, APRA-regulated superannuation funds allocate around 20% of their portfolios, on average, to private assets. Some funds have announced plans to pull back from this space, but many say they intend to allocate more in future.
It is not for ASIC to lead the discussion on investment allocation. It is for ASIC to expect that as their exposure to private markets grows, funds stay focused on their obligations – both to members, and to the market as such significant participants in that market.
That includes ensuring that they are acting in the best financial interests of members, that they adhere to all laws and standards of market conduct and integrity, that their investments, whether held directly or through fund managers, are valued appropriately, and that risk is clearly disclosed and communicated to members.
I want to congratulate APRA on their inaugural publication of fund level data on expenditure. This is an important transparency measure that will help ensure trustees are meeting the expectations of members in every dollar they spend.
We will shortly embark on a complementary piece of work: a financial reporting and audit surveillance of superannuation funds. This is the first financial year that financial reports of superannuation funds were lodged with ASIC, and we plan to ensure that there is a high standard of reporting, to build confidence and trust.
Conclusion
Ultimately, you can’t have good retirement outcomes without good member services – and you can’t have good member services without accountability, transparency, and consistency in the way you meet the expectations of your members – your customers.
We will continue to do our job to ensure trustees measure up to their responsibility to do theirs.
As I look ahead to my second year with ASIC, I can see that 2025 is going to be another significant one in our superannuation work, and in our job in the superannuation system.
But we don’t want you to wait until then to act – we need you to start improving the systems and processes in your job today.
Thank you.
[1] National, state and territory population, September 2023 | Australian Bureau of Statistics
