Mercer Super faces $10.3 million penalty over ASIC reporting failures

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Mercer Super faces ASIC penalty

Highlights

Federal Court orders Mercer Super to pay $10.3 million penalty for inadequate systems and failures to report breaches to ASIC between October 2021 and September 2024.
Unreported and late-reported investigations involve delays in allocating $64 million in member funds, higher fees, less favourable insurance, and failures in providing required cover.
ASIC warns Mercer Super's compliance failures undermine consumer safeguards, expose system weaknesses, and compromise regulatory oversight, signaling increased enforcement focus on superannuation trustees through 2026.

Court ruling details compliance breakdown

As reported by ASIC, the Federal Court finds Mercer Super’s systems for complying with the Corporations Act reportable situations regime are inadequate between October 2021 and September 2024. The regime requires Australian financial services licensees to promptly notify the regulator of investigations into potentially significant breaches of their core obligations.

The Court also finds that Mercer Super fails to report seven reportable investigations to ASIC and reports another investigation late. In the late-reported case, the Court finds Mercer Super does not take all reasonable steps to ensure the report is accurate and provides false or misleading information that understates the number of members affected.

The unreported or late-reported investigations include failures to update member accounts, leading to higher fees and less favourable insurance policies, delays in allocating $64 million in member funds, and failures to provide death and total and permanent disability insurance cover for eligible members.

Regulatory message for the superannuation sector

ASIC Chair Sarah Court says the deficiencies are inappropriate for a superannuation trustee of Mercer Super’s size and market position. She says the failures weaken a key consumer protection safeguard and expose fundamental weaknesses in the fund’s systems and processes.

Justice Button also finds ASIC’s supervisory role is seriously compromised by the duration of the investigations that Mercer Super does not report. The Court further finds Mercer Super is on notice that its compliance systems are not adequate and that there is a risk investigations are not being identified and reported as required.

ASIC says the reportable situations regime is designed to give the regulator early visibility of misconduct, push licensees to prioritise investigations and remediation, and strengthen transparency across financial services. The regulator adds that holding super trustees to account for member service failures is one of its 2026 enforcement priorities.

Our earlier coverage of the Maryland money-laundering sentencing detailed how federal authorities secured a lengthy prison term, restitution and forfeiture orders against a defendant linked to an $11 million laundering operation tied to fraud proceeds. We noted that the case was presented as part of a wider enforcement push aimed at strengthening anti-fraud tools and holding financial crime actors accountable.

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