ASIC finds some PYSP communications lacking

ASIC has found some super trustees’ member communications lacking about changes introduced through the Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019 (PYSP).

The PYSP reforms were introduced to protect super savings from erosion by inappropriate fees and insurance premiums, plus reduce unintended multiple low-balance accounts.

The main changes were designed for the benefit of members with super balances below $6,000 and those with inactive accounts for 16 months and more.

ASIC REP 655 presents findings from ASIC’s review of a broad range of communications material from 12 super funds with 6m member accounts.

The funds were chosen because of their relatively high number of inactive accounts, which PYSP reforms were considerably likely to affect.

ASIC commissioner Danielle Press said: “Our review found some good member communication. However, there were some common problems with the material we reviewed, which suggested trustees are not always sufficiently focused on their members’ needs.”

But it also found some of the communication material did not provide enough context for the reforms or adequately explain what the changes meant for members.

The report said some communications used complex language, promoted particular options that might not have been suitable for members or failed to include helpful information about members’ existing super arrangements.

“To implement the reforms effectively, trustees need to take a member-centric approach to designing and delivering their PYSP communications. They must ask themselves: ‘Will this approach help my members make decisions in their interest?'” Press said.

“We are reminding trustees to balance their focus on their own operational priorities, such as growing the number of member accounts or maintaining certain insurance arrangements, with ensuring benefits for those members targeted by the PYSP reforms.”

ASIC said it would continue to monitor trustee communications in relation to PYSP and related reforms and consider taking regulatory action where further issues were identified.