ASIC announced this week that it had fined Media Super $10,200 following concerns that a fact sheet sent to members inaccurately represented the costs and benefits of Media Super funds when compared to SMSFs.
In a statement on its website, Media Super said the error was accidental and ASIC’s response in imposing a financial penalty was an “over-reaction”.
Media Super stated there were no complaints about the fact sheet and “no apparent loss to any member arising from reading the fact sheet”.
Media Super also stated the error was minor and an “accidental omission of a component of Media Super’s fees”, which was corrected immediately after being identified.
“Media Super is vigilant in ensuring that it meets all of its regulatory obligations. Media Super is equally vigilant in cautioning members about the potential costs and risks of self-managed super funds, and will continue to do so,” the industry fund said.
However, Quantum Financial’s Tim Mackay told SMSF Adviser a $10,200 fine for a large institution is a “drop in the ocean”.
“I don’t think it really sends the right message to the institution itself and to the rest of the market… there needs to be [more of] a rap over the knuckles than that in my opinion,” Mr Mackay said.
The regulations that determine maximum fines should potentially be readdressed, he continued, with $10,200 being the maximum penalty that can be issued by ASIC to a corporation for an infringement notice.
The SMSF Professionals’ Association of Australia (SPAA) also joined the debate, saying the penalty represents a “warning shot” to APRA-regulated funds about their public commentary on SMSFs.
SPAA’s Graeme Colley said making comparisons between different superannuation sectors is an “apples and oranges approach”.
“SPAA’s position is that the right superannuation fund depends on a person’s circumstances, and the best way to determine which fund is the most beneficial is to get professional advice,” Mr Colley said.
Industry funds are run by amateurs and they are finding it really tough to compete, especially the smaller ones.
Graeme Colley is spot on with his comments about apples and oranges. There is no single answer to when to SMSF and when not to as it is totaly dependent upon personal circumstances.
Media Super should have been forced to pay a fine for each and every document they sent out. i.e. 1000 times $10,200.
Problem is who would have then ultimately paid the fine, the poor unwitting members through the not for profit charges they are paying?
If Media Super had genuine independent professional directors would they allow their own reputations to be sullied by this sort of behaviour?
Oops that is a reform ISN is against isn’t it. Wonder why?
In response to Rob,
I do agree that penalising the members funds is not a penalty on the perpetrators, i.e. management.
It would be useful to consider that the only penalties that can be applied to legal entities are ban on operating at a management level for an appropriate period of time, starting with say three months for a first offence.
Mr Colley’s statement is poignant, professional advice which considers a client’s circumstances is the best way, not a “fact sheet” but even stating that it’s general advice in tiny print as a disclaimer is silly; who reads disclaimers?
I Agree with Tim and Russel, it’s a very paltry consequence which results in damage to the integrity of the industry and consequently its regulator. I feel that a key issue however is a that any fine, hefty or paltry, really only penalises the memebers that it’s trying to protect and a retraction is of limited value as the damage is already done.
How about a retraction plus a significant period during which “fact sheets” must be ASIC approved before being sent out? That at least is proactive from the regulator. Then if futher “minor accidents” occur after that period, perhaps an EU to help “correct” the processes within and retrain thier editorial department?
Union funds still think they are a law unto themselves: “accidental omission”, yeah right!
“No apparent loss to any member”. Do they even read their statements?
“Media Super is equally vigilant in cautioning members about the potential costs and risks of self-managed super funds, and will continue to do so, the industry fund said”. What about the potential gains? What about freedom of choice? What about actual disclosed costs vs industry funds hidden fees and payments? Unbelievable
Dear MediaSuper, I recently accidentally erred by going through a red light camera and was fined accordingly. I didn’t injure anyone and there was minimal risk involved. Guilty Your Honour! I paid up.
Nothing is more powerful than the written word.
I agree with you Tim.
I am not in agreement with the writer – the penalty was paltry The financial world relies on integrity and any sign of the lack there of must have the most serious consequences