ASIC recently released its Corporate Plan for 2023–27, with a focus on FY 2023–24. The plan follows a year of progress against our strategic priorities and strong enforcement outcomes in 2022-23. JANE ECCLESTON – Senior Executive Leader, Superannuation and Life Insurance, at ASIC, details the regulator’s priorities in superannuation for the year ahead.
ASIC’s strategic priorities, outlined in our Corporate Plan, identify the focus areas of our work. These focus areas respond to key trends relevant to the regulatory environment, including the increased importance of sustainable finance, the challenges facing the digital and data economy, and an ageing population. We are also closely monitoring the development and use of artificial intelligence and what this means for the businesses and markets we regulate, and looking at potential uses of this and other technologies within ASIC. We will explore the use of all of our regulatory tools to deliver on these priorities, including by taking enforcement action where warranted.
In 2023–24, our work will be guided by four strategic priorities and core strategic projects. Our strategic priorities are:
Our core strategic projects to support the delivery of these priorities are outlined in more detail in the Corporate Plan. These are scams, sustainable finance practices, crypto-assets, design and distribution obligations (DDO), cyber and operational resilience and digital technology and data.
ASIC’s Enforcement Priorities for the next year will also be announced later this year to give a clear indication of how and where we will direct our enforcement resources and expertise in 2024. These priorities will continue to focus on the need to protect consumers from financial harm and uphold the integrity of Australia’s financial markets.
These priorities and projects shape the work undertaken by ASIC across a range of sectors, including superannuation.
As the superannuation system in Australia becomes increasingly complex as a result of technological developments, evolving risks like cyber and climate risks, changes in law reform and shifting consumer expectations, ASIC remains laser-focused on improving outcomes for superannuation members.
We will be keeping a close eye on the aspects of the Retirement Income Covenant (RIC) that interact with our consumer protection mandate. The core business of a super trustee is to help their fund members achieve good retirement outcomes. We want to ensure that trustees are doing this in a way that most effectively assists their members while ensuring they comply with the very laws intended to protect members.
Earlier this year, we released key findings from a review of how superannuation trustees are supporting their members under the RIC, conducted jointly with the Australian Prudential Regulation Authority (APRA). We found that trustees needed to focus more on understanding member needs, designing fit-for-purpose assistance and overseeing strategy implementation.
ASIC and APRA recommend that all superannuation trustees review the report and examples of better practice, and take steps to strengthen their retirement income strategies.
Service delivery by superannuation funds more broadly is also important for consumers as they plan and make decisions about superannuation products. We will be undertaking an industry review focused on Improving the delivery of member services by superannuation funds. The review will cover industry practices and compliance with laws in relation to trustee administration and contact centres. We will take action where appropriate, including enforcement action, against conduct that is misleading or otherwise results in unfair treatment of consumers.
We will continue to monitor the superannuation industry to identify greenwashing or overstating green credentials. In 2022, we took action against a number of trustees of superannuation funds for allegedly making misleading sustainable investment claims to investors and potential investors. Our approach to greenwashing over the past year has shifted from guidance to enforcement and we will continue to invest in surveillance in this space.
Product design and distribution
We will look closely at the way that superannuation trustees collect, assess and respond to data about consumer outcomes from their products. It is critical that trustees respond to poor outcomes that they identify by making the necessary changes to either their products or their product governance arrangements. We have ongoing work in relation to reducing harm caused by poor performance and harmful distribution of choice products in particular.
Last year, we called on superannuation trustees to review and if necessary, improve the effectiveness of target market determinations (TMD) for their products, after a sample review of trustee compliance found some poor practices. TMDs are a vital tool because they set the product governance controls that ultimately flow through to distribution.
Moving forward, there will also be an increased focus by ASIC on the reasonable steps requirement – that is, the requirement that a product issuer or distributor take reasonable steps that will or are reasonably likely to result in distribution of the product being consistent with the TMD.
New and evolving technologies continue to transform our financial system. While it is encouraging to see digital innovation, ASIC will act to disrupt and deter conduct that harms people.
As a result of growing scam, fraud and cyber threats, it is crucial that all superannuation trustees have adequate measures in place to prevent, detect and respond to these scam threats and we are undertaking work checking on this.
Creating a cyber resilient financial system requires close collaboration between industry, government and regulators, and we will continue to work closely with APRA, the Australian Taxation Office (ATO) and other regulators, Government and regulated entities on strategies to mitigate these risks and increase confidence in the financial system.
In addition to work directly aligned to ASIC’s strategic priorities as a result of recent law reform, ASIC will be monitoring implementation of superannuation fund financial reporting and audit requirements. We will work to ensure that trustees properly implement new obligations (effective since 1 July 2023) that require them to file fund financial statements and audit reports with ASIC and publish those documents on the fund website.
ASIC’s work more broadly relevant to the superannuation industry
ASIC will also undertake a range of cross-sector projects, some of which will have implications for the superannuation industry, such as:
In addition to the above, the following areas will also be part of our work in this financial year:
It is important to remember that superannuation is a critical financial asset for Australians, and for some, it is their only significant saving for financial security in their retirement years. It is imperative that trustees are placing members in the centre of their decision-making, and demonstrating that their decisions are consistent with the best financial interests of their members.
In alignment with these expectations, we will continue to monitor compliance and make full use of the regulatory tools at our disposal.
For more information about ASIC’s strategic priorities, visit our website. We are updating our enforcement priorities to align with our strategic priorities for FY 2023-24 and intend to announce these at the 2023 ASIC Annual Forum. Join us at the Annual Forum to find out more.
ASIC will also be taking part in a parallel session discussion at the 2023 ASFA Conference in Adelaide.