ASIC Secures $6.7 Million Penalty Against Mercer Super for Systemic Reporting Failures

Key Takeaways

• Federal Court Imposes Major Penalty: Mercer Super was ordered to pay $6.7 million (AUD $10.3 million) after the Federal Court found systemic failures in its reportable situations compliance framework.
• Multiple Investigations Went Unreported: The trustee failed to report seven reportable investigations and submitted another late while also providing false or misleading information that understated the number of affected members.
• Serious Member Service Issues Identified: The unreported investigations involved delayed allocation of $41.6 million (AUD $64 million) in member funds, insurance coverage failures, higher member fees, and insurance premiums continuing to be charged after members had died.
• Court Criticized Compliance Systems: The Federal Court found Mercer Super had been aware its compliance systems were inadequate and that ASIC's supervisory role had been seriously compromised by the reporting failures.
• Part of Broader Regulatory Push: The action aligns with ASIC's 2026 enforcement priority of holding superannuation trustees accountable for member service failures and follows several major enforcement actions across the sector.

Deep Dive

Australia's corporate regulator has secured a $6.7 million (AUD $10.3 million) penalty against Mercer Super after the Federal Court found the superannuation trustee maintained inadequate systems for identifying and reporting significant compliance investigations, allowing serious member service issues to go undisclosed or be reported inaccurately over nearly three years.

The ruling marks one of the most significant enforcement actions involving Australia's reportable situations regime, which requires Australian financial services licensees to promptly notify the Australian Securities and Investments Commission (ASIC) when they begin investigating potentially significant breaches of their core obligations. The framework is intended to give the regulator early visibility into misconduct, encourage timely remediation, and strengthen transparency across the financial services sector.

The Federal Court found that between October 2021 and September 2024, Mercer Super's systems for complying with the regime under the Corporations Act were inadequate. During that period, the trustee failed to report seven reportable investigations to ASIC and submitted another report after the statutory deadline.

Among the investigations that were either never reported or reported late were matters involving member accounts that were not updated correctly, resulting in higher fees and less favorable insurance policies, delays in allocating $41.6 million (AUD $64 million) in member funds, failures to provide eligible members with death and total and permanent disability insurance coverage, and an investigation into insurance premiums continuing to be charged after members had died before later being refunded.

The Court also found that Mercer Super failed to take all reasonable steps to ensure the accuracy of one report it did submit to ASIC. According to the judgment, the trustee provided false or misleading information that understated the number of members affected by the incident under investigation.

ASIC Chair Sarah Court said the deficiencies represented a sustained breakdown in governance rather than isolated compliance failures.

"These failures undermined a critical safeguard designed to protect consumers and exposed fundamental weaknesses in Mercer Super's systems and processes," Court said.

She added that the conduct was unacceptable for a superannuation trustee responsible for approximately $52.1 billion (AUD $80 billion) in retirement savings on behalf of more than one million members.

"This was not an isolated oversight. It was a sustained systemic issue that continued for years after the regime was introduced, which is unacceptable for a fund entrusted with $52.1 billion (AUD $80 billion) worth of retirement savings for more than a million members," Court said.

Court warned that when investigations into serious member service issues are not reported as required, problems affecting members can persist unchecked, increasing the risk of ongoing consumer harm.

"The Court's decision sends a strong message to the superannuation sector that accurate and timely reporting is not optional and when a fund falls short, we will take action," she said.

In handing down the decision, Justice Button found ASIC's supervisory role had been seriously compromised by the duration of the investigations Mercer Super failed to report. The Court also concluded the trustee had been on notice that its compliance systems were inadequate and that there was a risk reportable investigations were not being identified and disclosed as required under the law.

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