Superannuation trustees are failing to adequately protect members from scams and fraud, according to the Australian Securities and Investments Commission (ASIC), which has called for urgent improvements in industry practices.
In an open letter, ASIC Commissioner Simone Constant warned trustees that weak anti-scam measures could leave members vulnerable to financial losses, particularly as scammers develop more sophisticated tactics.
“Over the coming decade, an increasing number of superannuation fund members will reach preservation age. While all members are vulnerable to scams and fraud, members who have reached preservation age face fewer frictions in accessing their funds and tend to have higher account balances. These factors can make them attractive targets,” Constant said in the letter.
ASIC’s review of 15 superannuation trustees found that none had a dedicated strategy to prevent, detect, and respond to scams. The regulator noted that many trustees relied heavily on fraud prevention measures but had not specifically addressed the risks posed by scams, where members are tricked into transferring their funds.
ASIC also found a lack of oversight of third-party administrators, with some trustees unable to confirm whether basic anti-scam measures, such as engaging directly with members about suspicious activity, were in place.
The regulator cautioned that as more Australians reach preservation age in the coming years, the risk of scams targeting superannuation funds is expected to increase. Older members, who typically have higher balances, may be particularly vulnerable.
The Australian Financial Complaints Authority (AFCA) has also reported an increase in sophisticated scams targeting the sector, with some cases resulting in significant financial losses.
ASIC has urged trustees to reassess their fraud and scam prevention measures, including those managed by external administrators. It has recommended that trustees review its reports on scam prevention in the banking sector (REP 761 and REP 790) and adopt relevant baseline measures.
“As banks, telecommunications providers and other financial service businesses increase their anti-scam and anti-fraud capabilities, superannuation trustees must do the same or risk becoming a soft target,” Constant said.