Court finds the superannuation trustee failed to maintain adequate ASIC reporting systems
The Federal Court has ordered Mercer Superannuation (Australia) Limited to pay $10.3m in penalties after finding that the superannuation trustee failed to comply with ASIC reporting obligations.
The court found that Mercer Super breached the Corporations Act by failing to maintain adequate systems to identify and report reportable situations to the Australian Securities and Investments Commission (ASIC). The court also ordered Mercer Super to pay ASIC’s legal costs of $1.2m.
Mercer Super is a subsidiary of Mercer (Australia) Pty Ltd (MAPL) and the trustee of a superannuation fund known as the Mercer Super Trust (MST). The case concerned Mercer Super’s obligations under the reportable situations regime, which requires financial services licensees to notify ASIC of certain investigations and compliance matters within prescribed timeframes.
The court noted that between 1 October 2021 and 30 September 2024, Mercer Super’s systems for complying with its statutory-breach reporting obligations under the Corporations Act were deficient. The court found that Mercer Super failed to identify when relevant investigations had commenced, track how long they had continued, and determine when they became reportable to ASIC.
Mercer Super is the trustee of the Mercer Super Trust and holds an Australian Financial Services Licence (AFSL). After members of the BT Super Fund transferred into the Mercer Super Trust in April 2023, the fund became the seventh-largest superannuation fund in Australia by membership.
The court said Mercer Super’s governance, risk and compliance database did not include fields to record the start date of an investigation, the date an investigation became reportable, or the deadline for reporting to ASIC. Mercer Super also relied on informal and undocumented tracking processes that varied between compliance staff and did not ensure consistent compliance.
The court accepted that the system failures meant Mercer Super had not done all things necessary to ensure that financial services covered by its licence were provided efficiently, honestly and fairly.
The court also found that Mercer Super failed to report at least eight reportable investigations on time or at all. Those failures resulted in 15 contraventions of the Corporations Act.
One incident involved a technical error affecting employer-sponsored superannuation accounts. The error meant that some members risked missing out on benefits available under their employer’s sub-plan, including lower fees, default insurance, and specific insurance premiums.
Mercer Super lodged a report with ASIC about that incident after the statutory deadline. In seven other investigations, Mercer Super did not lodge any report with ASIC.
The court also found that Mercer Super submitted three reports to ASIC that contained materially false or misleading information. The reports understated or inaccurately described the number of affected members and the status of the investigation.
ASIC accepted that Mercer Super did not deliberately seek to mislead the regulator. However, the court found that Mercer Super failed to take reasonable steps to ensure the reports were accurate.
The Federal Court imposed penalties of $4.06m for the systems breach, $5.3m for the reporting contraventions, and $937,500 for the misleading reports.
ASIC Chair Sarah Court said in a statement that the systemic deficiencies and conduct identified were inappropriate for a superannuation trustee of Mercer Super’s size and market position.
“These failures undermined a critical safeguard designed to protect consumers and exposed fundamental weaknesses in Mercer Super’s systems and processes,” Court 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.”
