ASIC warns super fund trustees

ASIC’s report suggests that, in some cases, this oversight has been inadequate. The regulator found persistent gaps in controls over advice fees, including cases where protections had gone backwards over the past two years. 

One trustee proposed allowing advice fees of up to $30,000, which ASIC said was well beyond caps identified in earlier regulatory work. 

ASIC also found that checks on advice documents were limited. Half of the trustees reviewed reported they did not conduct any checks for at least one of the months in ASIC’s review period. 

The regulator also criticised insufficient scrutiny of advice licensees’ business models, including whether they relied on lead generators or other third-party referral sources. 

One of the most concerning findings was that some trustees were carrying out very few checks despite serious warning signs. 

ASIC said it was extraordinary that some trustees were not carrying out any checks in a month despite a 75% adverse finding rate from the checks that were conducted. 

NSA says that, if three-quarters of a small sample of checks are finding problems, trustees should be doing more checks.  

ASIC also highlighted inadequate monitoring of key risk indicators, such as member churn, unusual fund flows, patterns in fees, and investment holding limits. These are important safeguards because unusual activity can be an early warning sign that members are being moved into inappropriate or high-risk arrangements. 

The issue also connects with NSA’s recent submission to Treasury on strengthening the superannuation performance test. 

We argued that more superannuation products should be tested, and that the tests should become more stringent over time. The current performance test applies to many products, but not all. 

NSA has raised particular concern that retirement-phase products are excluded, even though performance is especially important once people are relying on their super income.  

For the 2025 performance test the only products – the test is applied per-product, not per-fund – that failed were platform products. This is despite their fee benchmark being almost twice as high as non-platform products. Many funds are tested based on a 0.24% administration fee, but platforms are allowed 0.47% admin fees for their test. 

Our submission noted that total superannuation assets are approaching $4.5 trillion, including more than $3 trillion in large super funds. With so much of Australians’ retirement wealth held in super, effective oversight is essential. 

We have also warned that the current test allows some products to underperform benchmarks and still pass, raising the question of whether the system is encouraging better performance or simply defining an acceptable level of underperformance. 

As the ABC reports, ASIC’s message to trustees was blunt: “do your job”. They should keep members’ money safe and ensure value for money.

ASIC has urged Australians to engage with their super in the same way they engage with their bank accounts, reflecting the importance of super to long-term financial security. 

For older Australians, the stakes are high. Superannuation is not just an account balance; it is a source of income and independence in retirement. 

Trustees, regulators, and policymakers must do more to ensure retirement savings are protected, investment options are monitored, and poor-performing or risky products are identified before retirees suffer avoidable losses. 

Related reading: ASIC, ABC, NSA