ASIC super boss Simone Constant warns $3tr nest-egg becoming soft target as banks, telcos lift scam game

Australia’s financial watchdog fears superannuation funds will become the soft target for scammers if they fail to improve their fraud-fighting and anti-scam systems.

The Australian Securities and Investments Commission has called on super trustees overseeing $3 trillion of retirement savings to start finding ways to improve their technology and governance as millions of people headed towards retirement.

ASIC commissioner Simone Constant has told the trustees to read reports on the scam prevention and detection work by banks and to look at ways of making improvement across the super industry.

“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,” Ms Constant said.

Her letter reflects concerns raised by ASIC commissioner Joe Longo last week about super funds being aware of growing reports of scams but not taking the threat seriously. “It’s just an under-investment — that’s where governance issues arise,” he said.

Mr Longo warned it was seeing increased activity of promoters trying to direct retirement savings to high-risk investments, such as direct property being flogged by spruikers and held through self-managed superannuation funds.

ASIC is distinguishing between anti-scam and anti-fraud activities in trying to get the retail, industry and corporate super funds it regulates to lift their game.

It describes frauds as unauthorised transactions, whereas scams involve situations where member are tricked into transferring funds from their account or helping a scammer move the money.

Ms Constant told trustees a recent review of super funds found they were over-reliant on anti-fraud measures and had “limited focus on the specific risks and harms associated with scams”.

The funds focused on confirming the identity of the member requesting the transfer, rather than looking for indications the member may have been tricked into the releasing their savings, she said.

With super funds under pressure to minimise costs, they regularly outsource key parts of their customer account management to an external providers.

Ms Constant said that while all members are vulnerable to scams and frauds, people around retirement age faced fewer “frictions” in gaining access to their funds and tended to have higher balances.

“These factors can make them active targets,” she said.