Retail private credit funds, customer claims handling, unsuitable superannuation advice front of mind for ASIC in 2025

ASIC has released its key issues outlook for 2025. For the superannuation industry, the following issues (in no particular order) are front of mind for the regulator:

• changing dynamics between public and private markets;
• superannuation members being let down by their fund and trustee;
• unsuitable superannuation advice resulting in adverse consumer outcomes; and
• cyber-attacks, data breaches, and internal system failures undermining market confidence and causing financial loss.

These priorities reflect ASIC’s ongoing surveillance of superannuation trustees, and its aim to maintain integrity of the system and protect consumers from harm.

We discuss what ASIC's latest release means for superannuation trustees below.

Changing dynamics between public and private markets

There has been a real focus by the regulators to date in respect to the superannuation industry's exposure to private markets. APRA has been vocal in terms of the industry's increasing exposure to private assets and its expectations. In December 2024, APRA released its finding from a review into superannuation trustees’ progress in implementing enhanced valuation governance and liquidity risk management requirements (which were intended to help trustees in aligning their practices with Prudential Standard SPS 530 Investment Governance), including in relation to the use of independent external asset valuations and the effective management of potential conflicts of interest in valuation processes.

ASIC also noted in the ASIC Corporate Plan 2024-2025 that: "As part of our focus on private markets, ASIC will consider the role of superannuation in the growth of private investment activity and the implications of this growth for the superannuation industry".

In the most recent ASIC "key outlooks", ASIC's focus now seems to have expanded to the retail managed funds space, with ASIC chair Joe Longo stating, "We are also increasing our focus on private markets through our surveillance work: as part of this work ASIC will review the governance processes and practices of a sample of responsible entities of retail private credit funds, including their asset valuation and liquidity management practices".

The issues with the opacity of private credit and lack of regulation are underpinned by recent events, such as AustralianSuper, Australia's largest superannuation fund, writing off over $1.1 billion in equity and private loans after Pluralsight underwent a restructuring due to a steep decline in its performance amid rising interest rates and increasing market competition.

We are expecting ASIC to release their report on this issue in late February.

Superannuation members being let down by their fund and trustee

As more Australians become eligible to access their superannuation in the next 10 years with at least $750 billion of funds shifting to the retirement phase, superannuation trustees need to ensure they can meet members' changing needs. However, between 2021 and 2023, complaints to the Australian Financial Complaints Authority (AFCA) about superannuation funds’ service provision (complaints in the "service" issue category) doubled.

Notably, ASIC launched civil proceedings against Cbus over delays in death and disability payments which ASIC alleges cost thousands of members dealing with disability and the death of loved ones at least $20 million. This aligns with ASIC's 2025 enforcement priority to improve member service failures.

One 28 January 2025, Treasury announced that it would be drafting mandatory service standards and enforceable service standards for all large APRA‑regulated superannuation funds.

The new standards will initially target critical areas where complaints data shows the greatest need for improvement, such as the timely and compassionate handling of death benefits; fair and efficient processing of insurance claims; and clear, respectful and accessible communications with members.

This announcement comes at the same time that APRA has announced that its annual superannuation statistics publications will include fund-level insurance data, covering claims, coverage, premiums and member engagement metrics to further improve transparency. The resulting transparency is intended to hold trustees and insurers accountable to improve the value and service members receive.

Unsuitable superannuation advice resulting in adverse consumer outcomes

ASIC's 2025 enforcement priorities for the superannuation industry include targeting misconduct that exploits superannuation savings. ASIC has warned that business models which engage in high-pressure cold calling sales tactics to influence customers to switch superannuation funds, resulting in adverse consumer outcomes, could be construed as misleading and deceptive conduct or breaches of obligations to act efficiently, honestly and fairly.

This issue of inappropriate cold calling was most recently reported in ASIC Report 781 where ASIC noted the need for superannuation trustees to investigate such "red flags" in financial advisers and licensees and noted that it will continue to scrutinise such business models that facilitate the inappropriate deduction of advice fees for unsuitable superannuation advice.

ASIC has also noted in its 2025 enforcement priorities that the use of social media algorithms to target receptive audiences (which has enabled rapid growth in these types of business models). Superannuation trustees should also be aware that they made be held accountable for the conduct of their representatives engaging in such practices, with Longo warning "You can’t delegate away your fundamental responsibilities".

Other priorities

Of course, ASIC's 2025 enforcement priorities should remain front of mind for superannuation trustees. Other priorities include cyber security threats and operational resilience, governance arrangements in light of AI and directors' duties (together with ASIC's recent announcement on 30 January 2025 regarding its focus on scams and fraud risk). As Longo stated: "You can expect us to be active on directors' duties and governance issues." Trustees may find it worthwhile to review their governance obligations, including those outlined in APRA Prudential Standard SPS 510.