Large penalties against super funds are appropriate: ASIC

ASIC commissioner Simone Constant told Financial Standard that many super fund trustees have taken accountability for not meeting their requirements to members, know they need to improve and accept the penalties that are brought against them.

However, when it comes to the court applying large penalties on profit-to-member funds, Constant said concerns that members might foot the bill is a "sideshow".

"They've said it to us, and they have said it publicly, 'We need to do better'. So, I don't think there's any decision makers or people in industry funds that would think that ASIC should not be bringing actions that are proportionate, that the court thinks is appropriate and is consistent with the harm done," Constant said.

"I think that argument, or that discussion is a sideshow. We're doing our job as ASIC, bringing these actions which we believe are driving the industry to do things better."

Some discussion on the issue of large penalties was brought up earlier this year after AustralianSuper was hit with a $27 million fine for dragging its feet on merging multiple accounts for members.

At the time, ASIC was entitled to seek a significantly higher penalty of $140 million. ASIC later told the Senate Economics Committee it did not seek a higher penalty, in part, because there is law prohibiting penalties being paid directly from member funds.

However, Constant said ASIC is doing its job in taking funds to court where there have been failures, but how the court responds is not under its control.

"It's actually pretty simple from ASIC's perspective. The courts have various basis on which they'll set the fine for penalty. So that is a matter for the courts," she said.

"The way ASIC thinks about it, though, is that we need to do our job, and our job by law is to bring full force and effect for law. Where we see this sort of failure, we need to bring the case, we bring the evidence.

"And when there's that sort of discussion about, 'a fund paying a fine, that's to the disadvantage of members'... if it's a profit for member fund, our job at ASIC is to think about all of the members, and the responsibilities to all of the members, and of course, to get into that discussion almost puts to the side the heart of the issue, which is the fund's failings to meet responsibilities, commitments, obligations to these members."