Mercer Superannuation (Australia) Limited (Mercer) under fire again: ASIC alleges systemic failure to report member services investigations

On 14 August 2025 ASIC made an application under sections 1317E and 1317G of the Corporations Act 2001 (Cth) (Corporations Act) and section 21 of the Federal Court of Australia Act 1976 (Cth) (Proceedings). By its application, ASIC alleges that from October 2021 to September 2024, Mercer had inadequate systems in place to comply with the reportable situations regime. The regime requires Australian financial services licensees promptly report ongoing investigations into significant breaches of their core obligations.

It is important to note that the Proceedings have not been concluded and no findings have been made against Mercer. However, the nature of the allegations is important in an environment when Australian regulators have become active against superannuation funds.

By these Proceedings, ASIC applies for the making of declarations of contravention of civil penalty provisions against Mercer and orders that Mercer pay to the Commonwealth a pecuniary penalty.

The failures ASIC allege include completely failing to report seven investigations and reporting another investigation more than a year late. ASIC also alleges that Mercer provided false or misleading information in its reports to ASIC, including understating the number of members affected by the incident.

According to ASIC, these include investigations into whether Mercer:

1. failed correctly to refund premiums after members died;
2. failed to create member accounts with default insurance; and
3. failed to process updated to member information.

Relevant provisions

ASIC seeks a range of declarations and pecuniary penalties in relation to Mercer’s conduct, alleging contraventions of the following provisions of the Corporations Act:

• Section 912DAA (1) which sets out that if there are reasonable grounds to believe that a reportable situation has arisen in relation to a financial services licensee:
  • the licensee must lodge a report in relation to the reportable situation with ASIC; and
  • the report must be lodged in accordance with the balance of the section (including subsection (3) which requires the report to be lodged within 30 days);
• Section 912DAA (7) which is a civil penalty provision and states that a person contravenes this subsection if the person contravenes subsection (1);
• Section 912A (1) which sets out the general obligations of financial services licensees, specifically:
  • Subsection (1)(a) which sets out that they must do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly; and
  • Subsections (1)(c) which sets out that they must comply with the financial services laws;
• Section 912A(5A) which is a civil penalty provision and states that a person contravenes this subsection if the person contravenes subsections (1)(a), (aa), (ca), (cc), (d), (e), (f), (g), (h) or (j);
• Section 1308 (4) which is a civil penalty provision and states that a person contravenes this subsection if they knowingly or recklessly make or allow a false or misleading statement r omission in a document required to under the Corporations Act, or lodged with ASIC or the Registrar; and
• Section 1308 (5) which is a civil penalty provision and states that a person contravenes this subsection if they fail to take all reasonable steps to ensure that a document required under the Corporations Act or lodged with ASIC or the Registrar is not materially false or misleading.

Declarations

ASIC seeks the following declarations:

• A declaration that Mercer’s systems to ensure compliance with sections 912DAA(1) and 912DAA(7) were deficient and thereby contravened:
  • section 912A(1)(c) of the Corporations Act by failing to comply with the financial services laws; and
  • sections 912A(1)(a) and 912A(5A) of the Corporations Act by failing to do all things necessary to ensure that the financial services covered by its licence were provided efficiently, honestly and fairly.
• A declaration that Mercer contravened sections 912DAA(1) and 912DAA(7) by failing to make a notification to ASIC within 30 days after Mercer first knew, or was reckless with respect to whether, there were reasonable grounds to believe that a reportable situation had arisen in respect of each of the eight incidents; and
• In relation to the incident that was lodged that:
  • Mercer contravened section 1308(4) of the Corporations Act by lodging reportable situation reports, regarding the incident it did report, in circumstances where it knew, or was reckless as to whether, each report was materially false or misleading because of statements made in those documents; or
  • Mercer contravened section 1308(5) of the Corporations Act by failing to take all reasonable steps to ensure that the reportable situation reports, regarding the incident it did report, were not materially false or misleading because of statements made in those documents.

Pecuniary penalties

In relation to pecuniary penalties, ASIC seeks an order pursuant to section 1317G of the Corporations Act that Mercer pay to the Commonwealth a pecuniary penalty or penalties of an amount to be fixed by the Court in respect of contraventions of:

• sections 912A(1)(a) and 912A(5A) of the Corporations Act;
• sections 912DAA(1) and 912DAA(7) of the Corporations Act; and
• sections 1308(4) or (5) of the Corporations Act.

This action from ASIC is a part of a string of proceedings by which ASIC is holding superannuation funds to account. In November 2024, ASIC commenced proceedings against United Super Pty Ltd alleging systemic failures in death benefit and TPD insurance claims processing and in March 2025, against AustralianSuper Pty Ltd alleging delays in the processing of nearly 7,000 death benefit claims.

The Proceedings follow the Federal Court’s decision in September last year that required Mercer to pay a landmark $11.3 million pecuniary penalty for engaging in greenwashing which contravened sections 12DF(1) and 12DB(1)(a) of the Australian Securities and Investments Commission Act 2001 (Cth). Lavan previously considered this decision found here.

Lavan comment

Although no adverse findings have been made to date, these Proceedings against Mercer are a reminder that one of ASIC’s 2025 enforcement priorities is focused on member services failures in the superannuation sector and serves as a cautionary reminder for companies to ensure their processes and systems in place comply with the reportable situations regime.

Thank you to Annie Harfoushian, Solicitor, for their valuable research and assistance with this article.

Disclaimer

The information contained in this publication does not constitute legal advice and should not be relied upon as such. You should seek legal advice in relation to any particular matter you may have before relying or acting on this information. The Lavan team are here to assist.