TIGHT SHIP

Has the race to the bottom on ultra-low administration fees come at the expense of fund administrators and ultimately member outcomes? Karren Vergara reports.

- Karren Vergara

At any given opportunity, policymakers and industry leaders love to boast about Australia's 'world-class' $4.1 trillion superannuation system.

While investments and performance have been impressive and the system has taken the pressure of the government to fully fund the greying population's twilight years, beneath the surface, something more menacing lurks - that trustees cannot seem to get the fundamentals of their administrative processes right.

ASIC's scathing March report into the timely payments of death benefits asks an even more disturbing question: do they know the processes at all? ASIC commissioner Simone Constantº¹ told Financial Standard the regulator will continue to apply pressure on the sector to ensure that all funds no matter how big or small - are meeting their obligations to members.

"It's not up to us to talk about how people get on boards or executive positions, and it's not up to us to tell them how to organise themselves...

Whether it's in-house or outsourced, it is for us to say to them, you need to know what's going on in that member experience," Constant says.

"You need to be looking at that key data and informing yourself, and you need to be responding accordingly, including whether it's investing in certain areas, whether it's changing approach, whether it's changing process, whether it's understanding things more from that member perspective." When ASIC sat down with some of the organisations they were "surprised" when their poor claims handling times were broached.

No one at the board and senior executive level, Constant says, was reviewing the claims handling time from start to finish.

"Instead of a debate being held about whether money is paid for a fine, actually invest into systems, the right processes and the right arrangements so that the responsibilities to these members are met, then we don't need to bring an action," she warns.