ASIC sues Mercer Super over 'longstanding and systemic' failures
Mercer Super allegedly failed to report seven investigations it undertook into serious member services failures, including one into premiums charged to dead members being refunded incorrectly.
Lodged with the Federal Court on August 14, the proceedings allege Mercer Super failed to report seven serious investigations at all, while another was reported more than a year later than it should have been.
Under the Reportable Situations Regime, all AFSL holders must notify ASIC of a reportable situation - in this instance, a significant breach of 'core obligations' - within 30 calendar days of it becoming known. The regime came into effect in October 2021.
The regulator alleges that, between October 2021 and September 2024, Mercer Super had inadequate systems in place to comply with the regime, resulting in the investigations not being reported.
This included there being no end-to-end policy or procedure to adequately identify when an investigation was commenced, how long the investigation lasted, and whether or not it was reportable under the regime. There were also inconsistencies as to how the commencement date of an investigation was calculated, ASIC said, with some considering it to be once "fact finding" was complete, while others were once the issue was deemed to be a significant breach of a core obligation.
The investigations, ASIC alleges, related to a range of issues including insurance premiums not being refunded correctly after members had died; member accounts not being created with default insurance; incorrect investment fees disclosed in product guides; communications not being issued to members when moving from active employment; and updates to member information not being processed.
Further, ASIC says Mercer Super understated the number of members impacted by the failures in three reports provided to the regulator. One example of this was a report that stated the number of members impacted was "not known", when in fact Mercer Super knew at least 231 members were involved and already remediated.
"We allege a pattern of longstanding and systemic failure by Mercer Super to comply with the law," ASIC deputy chair Sarah Court said.
"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.
"As one of Australia's largest super funds, Mercer Super should have had adequate systems in place to manage and monitor critical issues like this."
In a statement, Mercer Super acknowledged the action.
"We have co-operated with ASIC during the investigation of this matter and are currently reviewing the claim," it said.
"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 in the claim."
Mercer Super has some 950,000 members, serving as a home to their collective $70 billion in retirement savings.
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