Super Alert – 21 March 2025: Penalties for greenwashing, draft legislation for payday super, appeal against AFCA determination
Welcome to the weekly KHQ Super Alert. This week the Federal Court has been busy delivering various judgments relating to penalties for greenwashing, security for costs applications in appeals of AFCA determinations and a PYS insurance cancellation case. ASIC is also monitoring financial advisers for poor advice given in relation to superannuation contributions and rollovers. The exposure draft legislation for ‘payday super’ has been released for consultation.
APRA – Minor amendments to superannuation reporting standards
On 19 March 2025, APRA issued a media release announcing that it had ‘made minor changes to reporting standard SRS 101.0 Definitions for Superannuation Data Collections, reporting standard SRS 553.0 Investment Exposure Concentrations and Valuations and reporting standard SRS 606.0 RSE Profile to align to the APRA Connect taxonomy and clarify reporting requirements’.
Click here for details.
Federal Court – Greenwashing court action
On 18 March 2025, the Federal Court handed down its decision in Australian Securities and Investments Commission v LGSS Pty Ltd (No 3) [2025] FCA 205 which is another greenwashing-related proceeding. The first case in the series determined that the relevant trustee had made false or misleading representations in relation to a number of greenwashing statements. The second case found that these representations contravened various provisions of the Australian Securities and Investments Commission Act 2001 (Cth).
This third case relates to the penalty. All facts were agreed beforehand and presented to the Court. The Court then determined the appropriate penalties for each of the eight contraventions that were found. These penalties totalled $10.5 million.
In an associated media release, ASIC Deputy Chair Sarah Court said that ‘[t]his is a significant penalty that sends a strong message to companies making sustainable investment claims that those claims need to reflect the true position’. She also highlighted that ‘[t]his case demonstrates ASIC’s commitment to taking on misleading marketing and greenwashing claims made by companies promoting financial services’.
Click here and here for details.
Federal Court – Order for security for costs in appeal against AFCA determination made
On 18 March 2025, the Federal Court delivered its judgment in Edser v QSuper Board [2025] FCA 212. As referred to in our Super Alert of 28 September 2023, the case has a long history and is an appeal from a second AFCA determination concerning a declined TPD benefit. A single judge of the Federal Court dismissed the appeal in 2023 and the applicant has now appealed that Federal Court judgment.
The relevant trustee made an application to the Court seeking a costs order before it proceeds to the next stage of the appeal before the Full Court of the Federal Court. The application for security for costs was approved. The proceedings have been stayed until the applicant provides the security ‘in a satisfactory form’. If security is not provided, the further appeal will be dismissed.
Click here for details.
APRA – Chair’s speech about governance
On 18 March 2025, APRA published a speech delivered by its Chair, John Lonsdale. Mr Lonsdale announced that ‘APRA this month embarked on the first step in updating our cross-industry prudential standards on governance’, including ‘eight proposals that we believe will bring Australian standards in line with international and domestic best practice…’.
Mr Lonsdale explained that the eight proposals include a requirement for boards to have ‘a serious and credible vetting process – not just box ticking – and actually remove directors where necessary’; ‘a mandated limit of 10 years for non-executive directors at regulated entities’; and the requirement that ‘some directors don’t wear two hats – and are solely responsible for the interests of regulated entities within a group’.
Mr Lonsdale also addressed the accusation that ‘APRA is somehow singling out superannuation and seeking to run funds’ by explaining that ‘[w]e know that some superannuation funds have different arrangements for nominating directors. We do not propose any changes in this area. What we are simply saying is that directors must be competent as well as fit and proper persons regardless of how they are nominated’.
Click here for details.
ASIC – Financial advisers providing poor superannuation advice
On 14 March 2025, ASIC announced that it has taken action after identifying ‘multiple instances or a theme from breach reports submitted by Australian Financial Services (AFS) licensees of…misconduct by financial advisers’ relating to ‘poor superannuation advice involving contributions or superannuation rollover…[because by] following the advice, clients exceeded the superannuation contribution caps or untaxed plan cap resulting in clients paying more tax’.
The actions taken by ASIC against financial advisers so far include ‘two…reprimands’, ‘a written direction to appoint an independent person to audit the next 10 pieces of advice intended for retail clients…’ and ‘a direction to undertake continuing professional education in the next 12 months’.
ASIC reminded financial advisers that ‘[they] must identify their clients’ personal circumstances in relation to superannuation caps, so that advice provided is in their clients’ best interests’ and clarified that ‘[w]here we identify thematic misconduct involving financial advisers, we will consider taking regulatory action including referring financial advisers to the FSCP [Financial Services and Credit Panel]’.
Click here for details.
Treasury – Consultation on payday super draft legislation
On 14 March 2025, Treasury released exposure draft Bills, explanatory materials, regulations and explanatory statements in relation to the previously announced ‘payday super’ measures. These materials aim to:
- ‘require employers to pay their employees’ super at the same time as their salary and wages’; and
- ‘update penalties and charges for late or missed super payments’,
with effect on and from 1 July 2026.
In an associated media release, the Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, explained that ‘[w]hile most employers do the right thing, the Australian Taxation Office estimates $5.2 billion worth of super went unpaid in 2021–22’ and that the reforms aim to ‘protect and grow the retirement incomes of millions of Australians’. Mr Jones highlighted that ‘[b]y switching to payday super, a 25‑year‑old median income earner currently receiving their super quarterly and wages fortnightly could be around $6,000 or 1.5 per cent better off at retirement’.
The consultation period closes on 11 April 2025.
Click here and here for details.
APRA – Speech in relation to risk management
On 14 March 2025, APRA published a speech delivered by APRA Member Therese McCarthy Hockey. Ms McCarthy Hockey discussed ‘the importance of managing strategic risk’ and provided ‘insights from the findings of [APRA’s] thematic review into recovery and exit planning’. The risks discussed by Ms McCarthy Hockey included risks deriving from the use of ‘developing new technology’, including ‘developing and upgrading websites, creating mobile apps and building API-enabled architecture and cloud-based services’ – she explained that adopting the necessary ‘operational resilience measures that we have set out in CPS230 Operational Risk Management’ gives customers confidence.
Ms McCarthy Hockey also discussed the issue of ‘recovery and exit planning’ and explained that ‘[r]ecovery and exit planning is not an issue responsible boards and senior managers can neglect if they wish to remain in control of their destinies. Should boards be ill-prepared to handle a crisis, they risk APRA needing to step in and take over’.
Click here for details.
Federal Court – PYS insurance cancellation decision
On 13 March 2025, the Federal Court handed down its judgement in Madden v Australian Financial Complaints Authority Limited [2025] FCA 196. In summary, the relevant trustee had inadvertently sent an insurance cancellation notice (for PYS reasons) to the incorrect postal address for a member. As a result, the member never received a letter advising that he could opt-in to continue his insurance, and so the insurance cover was switched off by the trustee in 2019.
The member subsequently died and his legal personal representative lodged an AFCA complaint alleging that the trustee had incorrectly cancelled the member’s insurance cover. The AFCA determination in favour of the trustee was then appealed to the Federal Court by the legal personal representative.
Both AFCA and the Federal Court agreed with the trustee about switching off insurance when it did, and said that even if the trustee had sent the letter to any of the previous addresses that it had on file for the member, or the address that the ATO SuperMatch service held, the letter would still not have got to the member because the member did not update his address with anyone as he moved houses. Accordingly, the appeal was dismissed. We note that the relevant trustee filed a submitting notice, so only AFCA and the legal personal representative appeared at the hearing.
Click here for details.
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