Fund Regulatory Update

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Mutual Care AFS licence suspended

The Australian Securities and Investments Commission (ASIC) has suspended the Australian financial services (AFS) licence of Mutual Care Pty Ltd until 19 October 2023. Mutual Care was found to have failed to meet its statutory audit and financial reporting obligations.

Assurance Cover Australia AFS licence cancelled

ASIC has cancelled the AFS licence of Assurance Cover Australia Pty Ltd (ACA) as of 5 April 2023. ACA was operating an unlicensed managed investment scheme, Assurance Cover Australia, providing cover through a discretionary mutual fund for gig workers doing driving work.

ACA did not hold required professional indemnity insurance as of 26 April 2019. ACA’s licence was suspended in July 2022 for the same reason.

Ascent Investment to liquidate under court order

Ascent Investment and Coaching is to be liquidated by Federal Court order after ASIC’s investigation into a $149 million Ponzi scheme. The assets of Ascent and its director, Michale Dunjey, were frozen in December 2021, and Dunjey’s passport was confiscated.

ASIC alleges Dunjey was operating an unregistered and unlicensed scheme, with the business generating very little revenue while being propped up almost entirely by borrowed funds. Ascent was primarily making loan repayments from further loans, with considerable liabilities compared to assets.

Financial records produced by Dunjey were inaccurate and incorrect. ASIC says that Ascent owed around $149 million to clients but held only $4 million in assets.

APRA heatmap reveals 45 per cent underperformance rate

The Australian Prudential Regulation Authority's (APRA) most recent superannuation heatmap has revealed the worst and best-performing funds. Out of 407 options, 182 (45 per cent) underperformed the benchmark. Data used was to 30 June 2022.

Improvements were seen on 2021 results, with a fifth of those significantly underperforming in the latest heatmap compared with a quarter in this category in 2021. Choice products closed to new members are more likely to underperform and have higher fees than open ones.

APRA revealed options that significantly underperformed, managed by:

  • AUSCOAL Superannuation (Mine Super)

  • Avanteos Investments (Colonial First State FirstChoice Super)

  • AvSuper

  • Nulis Nominees (MLC Super)

  • BT Funds Management (Retirement Wrap, Pendal Growth Shares, BT Super For Life Advance Higher Growth, BT Super For Life Advanced Balanced and BT Super For Life Advance Higher Growth)

  • EISS Super

  • Perpetual (WealthFocus Superannuation Fund)

  • REI Super

  • Equity Trustees (Zurich Retirement Product, Umbrella Financial Plan Super, Crescent Wealth Superannuation Fund, smartMonday)

  • OnePath (Pendal Monthly Income Plus, Perpetual Conservative Growth, UBS Defensive, OptiMix Growth, OnePath Balanced Index)

Funds with very high administration fees include:

  • Diversa Trustees (Verve Super, Spaceship Super, Cruelty Free Super, Slate Super)

  • OnePath options

  • Equity Trustees options

Future Super penalty for greenwashing

Future Super was issued an infringement notice by ASIC in action taken for alleged greenwashing. ASIC had concerns regarding a social media post by Future Super that may have overstated the positive environmental impact of the Future Super Fund.

The statement in question was, ‘Naysayers don’t join together and move nearly $400 million out of fossil fuels.’ Future Super, at this time, had $400 million in total funds under management and had no basis to say that all of those funds had been invested in fossil fuels prior to being invested in the superannuation fund.

ASIC considered this statement to be misleading. The penalty was $13,320.

Government announcement on paying super with wages

The Federal Government has announced its plans for employees to pay superannuation with wages rather than quarterly, as has been the status quo until now. The change means employees can benefit from smaller but not insignificant accumulations in superannuation balances instead of employers benefiting from keeping those funds before payments each quarter. The change will also hold employers to account for paying superannuation.

APRA and AFCA sign MoU

APRA and the Australian Financial Complaints Authority (AFCA) have signed a memorandum of understanding (MoU) regarding their work together into the future. The MoU outlines the two organisations’ work in the finance industry.

APRA consultation on combining product histories

APRA is looking for feedback on the approach to make individual determinations for lifecycle MySuper products where combined performance histories are required for the Your Future, Your Super (YFYS) test.

The current performance test has two scenarios where performance may need to be combined - within-product changes (changes to structure or nature of product) and across-product changes (product closed, members transferred).

APRA is consulting on a draft technical determination for within-product changes to modify specific return formulae for the test contained in the regulations. Consultation is open until 11 May 2023.