One of Australia’s largest superannuation funds failed to tell ASIC about investigations into serious member services issues, including incorrect insurance premium refunds for dead members, the regulator alleges in new proceedings launched today in the Federal Court.
ASIC alleges that between October 2021 and September 2024, Mercer Super had inadequate systems in place to comply with the reportable situations regime, which requires Australian financial services licensees to promptly report ongoing investigations into significant breaches of their core obligations.
Examples of these systems failures include, ASIC alleges, Mercer Super failing to report seven investigations at all, and another investigation being reported more than a year late, including investigations into:
- insurance premiums not being refunded correctly after members had died
- member accounts not being created with default insurance, and
- updates to member information not being processed by the trustee.
ASIC also alleges Mercer Super provided false or misleading information in reports to ASIC, which understated the number of members who were impacted.
ASIC Deputy Chair Sarah Court said the case against Mercer Super was the latest in a series of actions ASIC had taken to drive change in the way trustees serve their customers.
‘We allege a pattern of longstanding and systemic failure by Mercer Super to comply with the law.’ the Deputy Chair said.
‘These aren’t just technical breaches. 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.
‘As one of Australia’s largest super funds, Mercer Super should have had adequate systems in place to manage and monitor critical issues like this.
‘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.’
Member services failures in the superannuation sector is one of ASIC’s 2025 enforcement priorities.
Over the past 12 months, ASIC has sued AustralianSuper and Cbus over alleged failures in handling death benefit and insurance claims. ASIC has also issued 34 death benefit claims recommendations to super trustees and flagged its next phase of work focusing on how trustees respond to customer complaints.
While ASIC is reviewing the reportable situation regime to make compliance simpler for licensees, Mercer Super’s alleged conduct falls well below what ASIC expects of a trustee of its size and market position.
‘There is work underway to review and simplify the regime but that doesn’t mean trustees can avoid their obligations. Mercer Super’s alleged failure to meet those obligations over several years is why we’re taking action’, Ms Court said.
ASIC is seeking declarations and penalties from the Court.
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Background
Mercer Super is the seventh largest super fund in Australia with more than 950,000 members and $70 billion in assets under management.
Separately, in August 2024, Mercer Super was fined $11.3 million after it admitted making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options. (24-173MR).
One of ASIC’s 2025 enforcement priorities is focused on member services failures in the superannuation sector (24-252MR).
Late last year, ASIC commenced Federal Court proceedings against United Super Pty Ltd (United Super), the trustee of Cbus, alleging systemic failures in death benefit and TPD insurance claims processing (24-251MR).
Earlier this year, ASIC commenced Federal Court action against AustralianSuper Pty Ltd, the trustee of Australia’s largest superannuation fund, alleging delays in the processing of nearly 7,000 death benefit claims (25-034MR).
In March 2025, ASIC handed down 34 recommendations to super trustees to improve the way they handle death benefit claims (25-049MR).
In a speech in June 2025, ASIC Chair Joe Longo outlined the next phase of ASIC’s work in the superannuation sector will address how trustees learn from and respond to the complaints they receive.
Editor’s Note 1:
The first Case Management Hearing is scheduled to be on 28 November 2025 before Justice Button.