The corporate regulator is taking Mercer Super to court alleging a systemic failure to report its investigations into member services.

The Australian Securities and Investments Commission says the fund manager did not tell it about investigations including those into incorrect insurance premium refunds for members who died, member accounts being created without default insurance, and the trustee not processing updates to member information.

The regulator is seeking declarations and penalties in the Federal Court action.

Mercer Super told insuranceNEWS.com.au it is reviewing ASIC’s claim, which relates to breach reporting obligations introduced in late 2021.  

ASIC says that between October 2021 and September last year, Mercer did not have adequate systems to comply with the reportable situations regime, which requires financial services licensees to promptly report investigations into significant breaches of core obligations. Mercer failed to report seven investigations, and another was reported more than a year late, it says.

The regulator further alleges Mercer provided false or misleading information in reports to ASIC that understated the number of members affected.

Mercer Super says it had co-operated with the commission and “we note that ASIC has expressly stated in its pleading that it does not allege that Mercer Super set out to deliberately mislead ASIC in respect of the matters set out in the claim”.

ASIC deputy chair Sarah Court says the case is the latest in a series aiming to change the way superannuation fund trustees serve customers. “We allege a pattern of long-standing and systemic failure by Mercer Super to comply with the law,” she said.

Allowing investigations of significant issues to drag on for months or, in some cases, more than a year without reporting them demonstrated a lack of care for customers, Ms Court says.

“As one of Australia’s largest super funds, Mercer Super should have had adequate systems in place to manage and monitor critical issues like this.”

Although ASIC is reviewing the reportable situations regime to make compliance simpler, Mercer’s alleged conduct “falls well below what ASIC expects of a trustee of its size and market position. Mercer Super’s alleged failure to meet those obligations over several years is why we’re taking action.”

ASIC enforcement priorities include member service failures in the superannuation sector and failures by insurers to deal fairly and in good faith with customers.

Its consumer-focused actions have included launching Federal Court proceedings against Choosi over allegations it misled consumers about the range of funeral and life insurance products it compared. It has also taken action against general insurers over pricing promise failings.