ASIC is suing Mercer Super in the Federal Court, alleging that the fund had “inadequate systems in place to comply with the reportable situations regime”, which requires all Australian financial services licensees to “promptly report” ongoing investigations into significant breaches of their core obligations.
“We allege a pattern of longstanding and systemic failure by Mercer Super to comply with the law,” ASIC deputy chair Sarah Court said in a statement.
“These aren’t just technical breaches. Allowing investigations into significant issues to drag on for months or, in some cases, over a year without reporting them to ASIC demonstrates a lack of care for customers and can put more at risk.”
ASIC alleges that, between October 2021 and September 2024, Mercer Super reported one investigation a year late and failed to report seven investigations at all, including investigations into failures to refund insurance premiums correctly after members died, member accounts not being created with default insurance and updates to member information not being processed by the trustee.
ASIC also alleges Mercer Super provided false or misleading information in reports to ASIC, understating the number of members who were impacted.
In a statement, a Mercer Super spokesperson said the fund acknowledged the ASIC action and was reviewing the claim.
“The matter relates to breach reporting obligations that were introduced by ASIC in late 2021,” the spokesperson said. “We have cooperated with ASIC during the investigation of this matter and are currently reviewing the claim.
“We note that ASIC has expressly stated in its pleading that it does not allege that [Mercer Super] set out to deliberately mislead ASIC in respect of the matters set out in the claim.”
It’s the latest in a series of actions against super funds over member services issues, with ASIC taking both Cbus and AustralianSuper to court over the last 12 months for alleged failures in handling death benefit and insurance claims. Court said that that Mercer Super “should have had adequate systems in place to manage and monitor critical issues like this”.
“The reportable situation regime is in place to ensure ASIC can identify misconduct early and take action to protect Australians. Customers expect their super funds to abide by the law.”
In April, ASIC also carried out a review of claims handling in the superannuation sector that found that none of the trustees that participated monitored or reported on end-to-end death benefit claims handling and that almost all of them had significant delays in their processes. Following the review, ASIC said that it wouldn’t shy away from more enforcement action in the future.
“If we continue to see failings, including when we circle back on this and in our ongoing focus on member services, we will and are required to bring enforcement action – unashamedly,” ASIC Commissioner Simone Constant told Professional Planner sister publication Investment Magazine in April.
“[Funds have] seen themselves as accumulation providers; they are service providers as well and that’s going to be increasingly important. They cannot take members for granted.”
