ASIC calls out super funds 'exploitation'
The $2.6 trillion superannuation industry has been exploiting opportunities to make money from Australians and forgetting it is the custodian of their money, the corporate regulator says.
Australian Securities and Investments Commission chairman James Shipton has told the super sector and the rest of the financial services industry they face a "trust deficit" that must be addressed.
"To be blunt, there has been too much focus in many parts of the superannuation sector on exploiting opportunities to make money from Australians instead of focusing on the responsibilities that come from being the custodians of other people's money," he said.
"This must change."
Mr Shipton said super funds have been exploiting the disengagement of consumers, such as by making it unreasonably difficult for people to opt out of insurance.
He also cited poor advice and treatment of customers as examples of behaviour that leads to unacceptably poor outcomes for super fund members and must stop if Australians are to have real trust in the system.
He said funds were defensive when it came to being transparent about their investment holdings.
"This is indefensible when, as I said before, it is other people's money," he told the Financial Services Council Summit in Melbourne on Thursday.
Mr Shipton said conflicts of interest in the finance industry must be identified and removed, while telling senior management to pay greater attention to conduct leading to poor outcomes for consumers.
He also called for industry leaders to improve their dealings with regulators, some of which were "totally unacceptable and arguably illegal".
His comments came ahead of next month's banking royal commission hearing on superannuation and coincided with the release of a Treasury submission about issues identified so far by the inquiry.
The government department noted there had been numerous failures by firms to adhere to existing regulatory obligations and deal openly and honestly with regulators.
Treasury said financial system regulators have been alert to the problems and taken action, but have not yet been able to change the underlying behaviours of many firms and industries.
"In our view, the financial system and the regulatory framework cannot perform efficiently when there is a disregard by financial firms to adherence to the law and broader community standards and expectations regarding their trustworthiness."
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