ASIC Sues Mercer Super Over Alleged Systemic Failures in Reporting Member Services Investigations

Key Takeaways

• Alleged Systemic Failures: ASIC claims Mercer Super repeatedly failed to report serious member services investigations between October 2021 and September 2024.
• Unreported Issues: The unreported or delayed investigations involved incorrect insurance premium refunds for deceased members, missing default insurance on new accounts, and unprocessed member updates.
• Misleading Reports: ASIC alleges Mercer Super understated the number of members impacted in reports it did submit.
• Regulatory Crackdown: Member services failures are a 2025 enforcement priority; similar actions have been taken against AustralianSuper and Cbus.
• Repeat Trouble: In August 2024, Mercer Super was fined $11.3 million for misleading claims about sustainability credentials in investment options.

Deep Dive

Mercer Super, one of Australia’s largest superannuation funds, is facing fresh legal trouble after the corporate regulator accused it of a pattern of systemic failures, the kind that can quietly erode trust in a sector meant to safeguard Australians’ retirement savings.

In proceedings filed in the Federal Court, the Australian Securities and Investments Commission (ASIC) alleges that between October 2021 and September 2024, Mercer Super fell well short of its obligations under the “reportable situations” regime. That framework, designed to help ASIC catch misconduct before it festers, requires licensees to promptly report significant breaches and ongoing investigations.

According to ASIC, Mercer Super’s systems were not up to the task. The regulator claims the fund never reported seven investigations, filed one more than a year late, and, in some cases, provided reports that downplayed the number of members affected. Those unreported investigations weren’t minor slip-ups, they included failing to refund insurance premiums to deceased members’ estates, failing to provide default insurance when new accounts were created, and even letting member records sit uncorrected despite updates being due.

“These aren’t just technical breaches,” ASIC Deputy Chair Sarah Court said. “Allowing investigations into significant issues to drag on for months or, in some cases, over a year without reporting them to ASIC demonstrates a lack of care for customers and can put more at risk.”

Court stressed that Mercer Super, with its size and reach, should have had robust systems in place to flag and escalate critical issues. “The reportable situation regime is in place to ensure ASIC can identify misconduct early and take action to protect Australians. Customers expect their super funds to abide by the law.”

The case is part of a broader crackdown. Member services failures in the superannuation sector are one of ASIC’s 2025 enforcement priorities, and Mercer Super is not the first trustee to land in the regulator’s sights. Over the past year, ASIC has taken action against both AustralianSuper and Cbus over alleged mishandling of death benefit and insurance claims. In March, it issued 34 recommendations to trustees on improving death benefit claims handling and, in June, flagged its next area of focus: how trustees respond to customer complaints.

Mercer Super’s troubles don’t stop here. Just last year, it copped an $11.3 million penalty after admitting it made misleading claims about the sustainability credentials of some investment options. Now, ASIC is seeking declarations and penalties over what it says is a years-long breakdown in governance and reporting, the kind of breakdown that, in the regulator’s view, goes to the heart of how a fund treats its members.

Court made clear that while ASIC is reviewing the reportable situations regime with an eye to making it simpler, there’s no leeway for avoiding existing obligations.

“There is work underway to review and simplify the regime but that doesn’t mean trustees can avoid their obligations,” she said. “Mercer Super’s alleged failure to meet those obligations over several years is why we’re taking action.”

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