The Federal Court has ordered Mercer Super to pay penalties totalling $10.3m after finding systemic failures to comply with the Corporations Act’s reportable situations regime.
The court found that between October 2021 and September 2024, Mercer Super’s systems for complying with the reportable situations regime were inadequate.
During that period, the trustee failed to report seven reportable investigations to ASIC and reported another investigation late.
…These failures undermined a critical safeguard designed to protect consumers…
In the late report, the court also found Mercer Super failed to take all reasonable steps to ensure information provided to ASIC was accurate and made false or misleading statements that understated the number of affected members.
The investigations that were not reported, or reported late, included matters involving:
- Insurance premiums continuing to be charged after members had died and only refunded later
- Delays in allocating $64m in member funds
- Failures to provide eligible members with death and TPD cover, and
- Failures to update member accounts that resulted in higher fees and less favourable insurance policies
ASIC Chair Sarah Court said the failures represented “a sustained systemic issue” that continued for years after the reporting regime was introduced and undermined a critical safeguard designed to protect consumers.
“These failures undermined a critical safeguard designed to protect consumers and exposed fundamental weaknesses in Mercer Super’s systems and processes,” she said.
“This was not an isolated oversight. It was a sustained systemic issue that continued for years after the regime was introduced, which is unacceptable for a fund entrusted with $80 billion worth of retirement savings for more than a million members.”
Justice Button found ASIC’s supervisory role had been seriously compromised by the reporting failures and that Mercer Super had been on notice its compliance systems were inadequate.
Mercer Super is Australia’s seventh-largest superannuation fund, with more than one million members and almost $80bn in assets under management.
