Be ‘very wary’ of inducements to switch default super fund

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ASIC has warned employers to be wary of inducements being offered to encourage switching the default superannuation fund for employees.

“In some instances, employers may be offered inducements to select a particular default super fund for their employees. Inducements may cover a range of things including corporate hospitality and tickets to sporting events, or discounts on products or services. Many of these inducements are prohibited under s68A of the Superannuation Industry (Supervision) Act 1993,” says ASIC.

“Under this provision, that is administered by ASIC, the offering by a trustee or their associate of certain types of inducements to employers to join employees to a fund is illegal and may give rise to civil action by a victim who suffers loss or damage as a result of the conduct. The section provides a victim with an ability to take action where a trustee or an associate offers to supply goods or services to a person on condition that one or more employees of the person will be, or will apply or agree to be, members of the fund.”

ASIC Commissioner Tanzer said ASIC encourages employers to be “very wary” of trustees offering inducements to switch default super fund.

“Employers should not choose a default fund on the basis of an inducement. I strongly encourage employers who are concerned they may have been offered an inducement that is illegal to contact ASIC,” he said.

“Where we find evidence illegal inducements have been offered, ASIC will not hesitate to take action.”

In 2015 Industry Super Australia (ISA) released research indicating unnamed banks may have been offering benefits to employers to encourage switching default super funds. The Financial Services Council said the SIS Act prohibited such inducements, however the Act contains exemptions. The ISA said it had received legal advice that ASIC was unable to apply for a civil penalty for breaches of the ban.

ASIC said it would “continue to monitor the area of employer inducements”, including considering using shadow shopping exercises.

ASIC has also updated its MoneySmart website to “help employers select a default superannuation fund for employees”.

The website now includes examples of employers being offered tickets to sporting events or discounts on business loans.

“If you think you’ve been offered unlawful inducements by a super fund you can report it to ASIC,” says the MoneySmart website.

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