New legislation has put an end to trustees incentivising employers to appoint them as their default superannuation fund.
Part of the Treasury Laws Amendment (Improving Accountability and Member Outcomes in Superannuation Measures No 1) Bill 2019 bans trustees from using goods or services to influence employers to nominate the superannuation fund as the default fund.
Discounts, allowances, rebates or credits in providing goods or services to the employer or their associates are also banned.
Additionally, trustees cannot influence employers to encourage their employees to nominate the fund as their choice of fund.
Superannuation funds that fail to comply with the new provisions face civil or criminal penalties.
In the event of a civil penalty contravention, ASIC can apply for a court order.
If the court finds that a trustee has contravened civil penalty provisions, it can be slapped with a fine of up to 2000 penalty units.
The Bill brings to life Commissioner Kenneth Hayne's recommendation against treating of employers from the Royal Commission final report.
Hayne found legislation on how super funds compete to be nominated as default funds was too lax.
Some large funds spend significant amounts to maintain or establish good relationships with those who will be responsible for nominating the default fund for their employees by way of entertainment and sporting events, he said.
Hayne made an example of Hostplus at the Royal Commission, questioning its annual $260,000 spend on hosting employers at the Australian Open Tennis.
Hayne said Section 68A of the SIS Act does not go far enough in preventing "treating" employers and called for the Act to be amended to include a civil penalty provision in the event of a breach - which is to be enforceable by ASIC.