Speech by ASIC Commissioner Danielle Press at the Australian Institute of Superannuation Trustees Conference of Major Super Funds, 22 March 2023.
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Good morning and thank you to the Australian Institute of Superannuation Trustees for inviting me to speak today.
In my opening remarks I would like to talk about ASIC’s insurance in superannuation report and then I will also talk about greenwashing and handling disclosures.
Insurance in superannuation
In early 2022, we commenced a review to examine what actions superannuation trustees have taken to make meaningful improvements to their life insurance arrangements in superannuation for the benefit of their members.
Today we released a report on the outcomes.
Insurance in superannuation provides an important built-in safety net for around 8 million Australians.
Trustees have an important part to play in deciding what insurance is made available to their members and how it is provided.
During the review, we looked at 15 trustees, focussing on three broad areas:
insurance design and data,
claims handling practices, and
member communications and engagement.
We found that:
Trustees have made changes to the design of their insurance arrangements to better meet their members’ needs and have improved how they use data to monitor member outcomes.
For example, 12 of the trustees have changed the criteria used to determine whether a total and permanent disablement claim will be assessed under a restrictive definition and/or have amended these definitions.
Many trustees have taken steps to streamline their claims processes to make them easier for members to navigate, and to enhance their oversight of insurers’ claims handling practices.
Some trustees have introduced death, TPD and income protection claims guides that explain how to make a claim and provide an overview of the claims process.
Some trustees have improved the way they explain their insurance offerings to help members understand and make informed decisions about their insurance.
However, some trustees have not sufficiently improved their member communications and claims processes, which is simply not good enough.
ASIC has written to the 15 trustees individually to provide detailed feedback and areas for improvement.
While improvements have been made, work still needs to be done across the board.
All super trustees should review the report and take action to make improvements to benefit the members they serve.
In particular, we think trustees could make improvements by:
using real-time data better to monitor member outcomes and to proactively identify how to better meet members’ needs and provide value for money
designing and delivering better claims processes to improve their members’ experience
embedding a process to continuously improve their member communication and processes to make it easier for members to understand their insurance cover, and
ensuring they have robust and fit-for-purpose systems, processes and controls to effectively manage how insurance is provided.
Ultimately, we want members to have confidence that they are getting value from the insurance offered through their superannuation and that it is meeting their needs.
ASIC provides consumer information on insurance through Moneysmart to enable consumers to check what insurance they have through their super and whether it’s appropriate for them.
I’ll now talk about greenwashing, which is one of ASIC’s enforcement priorities for 2023.
This is an important area to focus on because reliable disclosure practices are vital to a well-functioning market.
The findings of a recent ASIC survey showed that consumers take ESG credentials into account when making investment choices.
Consumers and investors should be able to make informed decisions about financial products with trust and confidence. This includes when they are looking at sustainability focused offerings in superannuation.
We are actively monitoring the market for potential greenwashing and taking enforcement action where we see disclosures that fall short and where potentially misleading sustainability-related claims are made.
Last month, ASIC commenced its first court action in relation to greenwashing against Mercer Superannuation.
We are alleging that sustainable investment options offered by Mercer Superannuation exposed investors to industries that the fund said were excluded from the offering, such as coal, alcohol production and gambling.
The super industry should take note: if financial products make sustainable investment claims, these claims need to reflect the true position of the product.
If investments in certain industries like fossil fuels are said to be excluded, this promise must be upheld.
ASIC will continue to closely monitor sustainability-related claims and take action where we consider representations are not substantiated.
The final topic I will talk about is whistleblowing. This is a key part of a transparent, accountable and safe work culture and an obligation under the Corporations Act for superannuation trustees.
Whistleblowers need to know that when warranted they can raise an issue within their workplace without being victimised.
Earlier this month, we released a report on good practices for handling whistleblower disclosures that we observed from a review of seven entities’ whistleblower programs.
The report highlights:
the importance of effective director oversight into whistleblower frameworks, and
the important role of whistleblower programs in helping improve overall corporate performance and governance.
We will continue to review entities’ whistleblower policies and arrangements for handling whistleblower disclosures.
We encourage entities to consider how to scale and tailor the good practices in the report to suit their organisation.
Thank you, I look forward to the panel discussion.