Report 833 Safeguarding super: How well are platform trustees monitoring risks to retirement savings? details findings from a review of six platform trustees entrusted with over $300 billion in retirement savings accounting for about three quarters of total funds managed by platform trustees.
It found there were significant gaps in the monitoring of harmful advice fee deductions, unusual fees and investment patterns, and high-risk superannuation switching activity.
ASIC Commissioner Simone Constant said the report found that some trustees are not doing enough to protect their members, despite repeated warnings from ASIC and APRA about the dangers of poor oversight.
“Nor have they learned lessons from the collapses of the Shield Master Fund and First Guardian Master Fund, which cost more than 11,000 Australians around $1 billion in retirement savings,” Constant said.
“In one disturbing case, a trustee failed to take further action for 13 months after becoming aware of suspicious activity from a representative of an advice licensee. During that time, another representative of that licensee submitted applications to rollover superannuation balances containing the falsified signatures of a deceased adviser.”
Constant said the clear gaps in oversight are deeply concerning and difficult to justify.
“In this age of rapidly evolving technology and data-driven intelligence, it is extraordinary to see some trustees not carrying out any checks in a month despite a 75 per cent adverse finding rate, and others being comfortable with limited, almost entirely manual indicators to monitor potential harm,” she said.
One of the major concerns ASIC had was the insufficient focus on understanding the advice licensees’ business models, including whether they use lead generators or other third‑party referral sources.
Constant said amid continued growth in demand for platform funds, it had never been more important for platform trustees to take the necessary steps to uphold confidence.
“Despite being well aware of the dangers of poor oversight — from the Royal Commission’s exposure of fees for no service to the egregious conduct exposed in the Shield and First Guardian failings — some trustees failed to establish basic protections, like looking into an advice licensee’s business model before they are onboarded. This is a clear breach of trust,” she said.
“Scrutinising fees that appear designed to bypass controls, and other processes to identify unusual activity such as high‑risk superannuation switching from lead generators, are among actions trustees can take to protect their members.”
Super Consumers Australia (SCA) said the report shows voluntary safeguards are not enough, and the Federal Government should introduce mandatory advice fee caps, mandatory holding limits and stronger trustee obligations for high-risk switching into platforms and SMSFs.
SCA chief executive Xavier O’Halloran said trustees are in a prime position to protect their members from high-risk super switching.
“They have the data. They can see fee patterns, adviser behaviour and unusual flows. It’s staggering that after everything that’s happened, ASIC is seeing so little progress.” O’Halloran said.
“How can you watch people lose $1.1 billion in hard-earned savings and do nothing to protect your own customers? After Shield and First Guardian, no trustee can say they didn’t know the danger.”
SCA said the findings demonstrate conclusively that the Government needs to act urgently to protect members’ savings through mandatory advice fee caps so people’s super cannot be drained through excessive advice charges.
It also called for mandatory holding limits and due diligence requirements so people cannot be overexposed to risky or inappropriate investments and stronger trustee obligations on high-risk switching and adviser monitoring so trustees identify red flags before people lose their retirement savings.
