ASIC goes legal on Mercer Super over handling dead | Australian Markets

The Australian Securities and Investments Commission (ASIC) has initiated legal motion in opposition to Mercer Super alleging it did not report critical member companies investigations to the regulator, together with incorrect premium refunds for dead members.

ASIC stated it’s launching Federal Court proceedings alleging that between October 2021 and September 2024, Mercer Super had insufficient systems in place to adjust to the reportable conditions regime, which requires Australian financial companies licensees to promptly report ongoing investigations into vital breaches of their core obligations.

Examples of these systems failures embrace, ASIC alleges, Mercer Super failing to report seven investigations in any respect, and one other investigation being reported more than a 12 months late, together with investigations into:

• insurance coverage premiums not being refunded appropriately after members had died
• member accounts not being created with default insurance coverage, and
• updates to member data not being processed by the trustee.

ASIC additionally alleges Mercer Super supplied false or deceptive data in studies to ASIC, which understated the quantity of members who had been impacted.

ASIC Deputy Chair Sarah Court stated the case in opposition to Mercer Super was the latest in a collection of actions ASIC had taken to drive change in the way in which trustees serve their clients.

“We allege a pattern of longstanding and systemic failure by Mercer Super to comply with the law.’” the Deputy Chair stated.

“These aren’t simply technical breaches. Allowing investigations into vital points to pull on for months or, in some instances, over a 12 months with out reporting them to ASIC demonstrates a lack of care for purchasers and might put more at risk.

‘As one of Australia’s largest super funds, Mercer Super ought to have had enough systems in place to handle and monitor essential points 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.’

Member companies failures within the superannuation sector is one of ASIC’s 2025 enforcement priorities.

Over the previous 12 months, ASIC has sued AustralianSuper and Cbus over alleged failures in handling death benefit and insurance coverage claims. ASIC has additionally issued 34 death benefit claims suggestions to super trustees and flagged its subsequent part of work focusing on how trustees reply to buyer complaints.

While ASIC is reviewing the reportable scenario regime to make compliance less complicated for licensees, Mercer Super’s alleged conduct falls nicely under what ASIC expects of a trustee of its dimension and market place.

‘There is work underway to review and simplify the regime but that doesn’t imply trustees can keep away from their obligations. Mercer Super’s alleged failure to satisfy these obligations over a number of years is why we’re taking motion’, Court stated.

ASIC is in search of declarations and penalties from the Court.