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Super funds hit by cyber attack
Australian super funds have been urged to step up their cybersecurity after several large funds, including AustralianSuper, Australian Retirement Trust (ART), Insignia Financial, Hostplus and REST experienced a cyber attack in late March and early April.
AustralianSuper reported a spike in suspicious activity in around 600 member accounts. Some members were defrauded of tens of thousands of dollars.
“Keeping members’ money and data safe is our highest priority and we have taken immediate steps to safeguard members’ accounts,” AustralianSuper said in a statement following the attack.
“We have now thoroughly investigated the incidents in which we’ve identified that money was transacted out of a member’s account and all of those are being remediated. Remediations will be made from fund reserves. We are deeply sorry about the distress caused by this criminal attack, and we are working with affected members to help protect their accounts,” the fund added.
It also expects two-factor authentication on internet logins to be live in about a month.
Members seeking to access their online accounts had some difficulty immediately following the revelation that there had been a cyber-attack, as websites were hit with high traffic.
ART said it could confirm its digital security system identified unusual login activity and that impacted accounts were locked as a precaution, and members and regulators were notified.
“We have not identified any suspicious transactions or modifications regarding these accounts,” ART said in a statement.
The Association of Superannuation Funds of Australia (ASFA) also sought to reassure fund members.
“In a rapidly evolving threat landscape there will always be new and emerging risks, but Australia’s super sector is proactively working together to improve system-wide defences, including through the ASFA Financial Crime Protection Initiative (FCPI),” it said in a statement.
ASIC impersonation scam alert
ASIC is also warning people about scammers claiming to be from ASIC sending emails and texts requesting recipients provide a payment to enable funds or assets to be released.
ASIC is reminding consumers that:
- It does not collect payments to enable the release of funds or assets
- If in doubt, call ASIC to verify that the communication you received is legitimate
- It does not provide guarantees of funds or assets release, and
- It does not provide payments into a digital asset exchange.
“If you receive unsolicited contact claiming to be ASIC or an employee of ASIC, always confirm you are dealing legitimately with ASIC by hanging up the call and calling back on the number listed on the ASIC website,” ASIC said.
Super well placed to surf market volatility
The Super Members Council of Australia (SMC) is reminding members that superannuation is a long-term investment and that they can be confident because it is designed to deliver strong returns over the long-term, despite cyclical ups and downs in the markets.
“We expect [these] market falls will have little impact in 20 years – and beyond – when most of today’s super fund members will be starting to think about retiring,” SMC’s executive general manager, strategy and insights, Matthew Linden, said.
“For current retirees or pre-retirees heading towards retirement soon, money that remains in super for many years enables short-term losses to be recouped,” he added.
The SMC pointed out that only one in five dollars of Australians’ super is invested in the US and any short-run declines in US markets should be considered in the context of strong investment performance in the US over the last 10 years, with returns of almost 14% per year.
Super funds’ handling of death benefit claims under fire
On another front, the superannuation sector has been rattled by a report from the Australian Securities and Investments Commission (ASIC) into death benefit claims, which includes 34 recommendations for super trustees.
The report identified a range of issues, including excessive delays, poor customer service, and ineffective claims-handling procedures.
“This is an important report that looked at 10 trustees, representing a total of 38% of all member benefits in superannuation funds regulated by the Australian Prudential Regulation Authority. While some trustees performed better than others, tellingly none of the reviewed trustees monitored or reported on their end-to-end claims handling times or performance,” ASIC chair Joe Longo said.
Longo said fund leadership did not have a grip on their fund’s data, systems and processes and ultimately customers were suffering.
“This kind of disconnect is unacceptable in any area of corporate Australia, but in the superannuation sector it is particularly serious, because super affects everyone from the boardroom to the living room,” he said.
The actions recommended for trustees cover a range of focus areas, including:
- better customer service and faster response times
- improved monitoring and reporting on claims handling timeframes
- streamlined processes and procedures
- better guidance and training for staff
- removing barriers for First Nations members and claimants
- clearer communications and more support for members.
ASFA chief executive officer Mary Delahunty apologised on behalf of the industry.
“The superannuation sector knows we have let down some of our members and their families at a time when they needed us, and we are sorry,” she said.
“While the majority of our members and their families have a seamless experience with death benefits claims, we know we need to do better to make sure this is the experience of as many people as possible.”
More financial advice from super funds a step closer
The Federal Government has released the next tranche of its financial advice reforms including the Advice Through Superannuation exposure draft legislation.
The proposals in the draft are expected to make it easier for super funds to offer members certain kinds of financial advice. This draft legislation amends the Superannuation Industry (Supervision) Act 1993 (SIS Act) to clarify the scope of the prohibition on super fund trustees collectively charging their members for personal advice. The proposals include an allowed topics list, an allowed circumstances list and a disallowed topics list.
The allowed topics list includes super contributions, investment options, insurance held through super, and retirement income.
“The lists have been designed to provide greater clarity and surety to trustees regarding the types of personal advice for which they can collectively charge,” information released by Treasury with the exposure draft said.
The allowed circumstances list is also important because it will allow a member’s financial situation outside of super to be considered. The circumstances list includes:
- Cashflow and income of the member’s household
- Assets and interests held outside of super by the member’s household
- Financial position of the member’s spouse
- Debts and liabilities of the member’s household
- Eligibility for government services.
ASX draws RBA and ASIC ire
The Australian Securities Exchange (ASX) has been put on notice by the Reserve Bank of Australia (RBA) and the Australian Securities and Investments Commission (ASIC) regarding their ongoing and growing concern about the management of operational risk at the ASX.
An official letter from the regulators follows the CHESS batch settlement failure incident that occurred on 20 December 2024.
Operational incidents such as these have the potential to affect the ability of the CHESS system to reliably service the Australian equities market until CHESS is replaced.
The regulators also highlighted their concern about the speed and nature of ASX’s remediation actions following the initial incident.
The RBA has downgraded ASX’s compliance with the “Operational Risk” standard from partly observed to not observed. A rating of not observed is made when serious issues of concern warrant immediate action.
ASIC has also directed ASX to engage an expert approved by ASIC to undertake a technical review of CHESS.
“ASX operates critical infrastructure that plays a central role in the financial system. ASX’s management of operational risk has been a concern for RBA staff and the Payments System Board for some time, and the recent CHESS incident has underscored those concerns. The underlying issues that we have raised need to be addressed as a matter of priority to strengthen the resilience of the CHESS system,” RBA Governor Michele Bullock said.
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