Welcome to that super show, the podcast. We talk about all things super from the inside. I'm Neil Benson, founder of Novagentic.

And I'm Sarah Penn, CEO of Mayflower Consulting. Each week we unpack what's changing in the industry, what funds are wrestling with and how tech and regulation are shaping the landscape.

Sometimes we bring in expert guests, but mostly it's just us having a real conversation about how super is working and what could make it even better.

Let's get into. Good morning, Neil, and welcome to that super show episode. I've got no idea what.

Thanks, Sarah.

How you doing?

It's a busy start to the year. Much.

Yes, very. How about you?

It's been good. I get it back into the swing of things. The kids are all back at school still very.It's day two or three and yeah, they're very happy to be dropped off at the playground to see how long that lasts.

Yes, I'm very happy to drop my kid. Well, to send her on away to the train, to be honest. But yes, very happy. I've got the house to myself right now. It's very exciting.

Great time to record a podcast.

I know. So ASIC put out a release on 27 January, Joe Longo's forward looking view of what they're going to be concentrating on this year.And there's a lot that impacts super funds, so I thought we could have a chat about these.

Well, you know, it just struck me as I was reading through this list. Joe Longo is leaving asic, I think at the end of the financial year, May or June, I think is.

Yes, he is, sadly, because he's been.

Quite sensible setting out like a forward plan for his successor. Like, here's what they should do. It's somebody else's homework. It's his job, I think, to lay out the point of view of the regulator.

This is very true. I did also notice that it has his name on it, but it's not. Doesn't say underneath that.From a speech that Longo presented at X, Y and Z. Oh, yeah, okay.

So it's just.

Yes.

His team has published it on his behalf on the blog.

Yes, yes, I think so.

All right, so I caught your eye in the, in the list of ASIC outlook issues.

Well, in, in no particular order, as they note, as he notes in the.In the commentary, in no particular order, number one, increased retail exposure to private credit and private market products that are less transparent and potentially miss soldier. Yes, yes.

So there's lots of super funds that do invest in Private credit and I guess on a wholesale institutional basis, it's a pretty mature market. Everybody's mortgage, or almost all mortgages are, you know, backed by some kind of institutional money.So that's all well and good, but I think there's a lot of retail private credit funds springing up where the managers have mixed experience of managing risk and picking out good debtors from bad debtors and what to do when things go pear shaped. And there's a good chance that some investors, retail investors, will get mixed up in all of that.

Yes, I think so. I mean, as you say, the big, by big super funds, we mean the industry funds, they all, as you say, have exposure to private credit.But for the platforms where they might have a couple of hundred or more managed funds on their list and ETFs and what have you, this is definitely something they need to be looking at. And I'm sure they all are looking at it very closely.And I also thought it was interesting to note that as more advisors are using managed accounts, there's a risk that if there's a particularly popular private credit fund, it could end up in a lot of managed accounts, which can then impact a lot of investors.Although having said that, it's unlike in a managed account, it's not the full exposure because a managed account would normally have, I don't know, somewhere between 10 and 20 investments in it. So it's not going to, it's not going to blow one person's life savings up through a managed account, but it might impact a whole lot of people.Yes, it'll be very interesting to see what happens this year in terms of ASIC coming out with wanting more reporting, wanting to see underlying assets. Actually for me it's actually more the fundamental issues which I was interested to note were not on this list around managed funds.Who runs managed funds, how you get a license to manage a fund, to run a managed fund, the fact that they're too easy to start, that there's no real requirements for any kind of education requirements and things that we have for financial advisors in the managed fund space. And I think it's more those funds.For me, it's those fundamental issues that then mean that when something's so hot right now like private credit, there's going to be a lot of people trying to start private credit funds who potentially don't have the experience to really know what they're doing and understand the reserving and cash that you need to keep aside in case loans go bad and all that sort of stuff.

He does mention later on inexperience, I think with regard to fintech startups and things, not understanding the regulatory landscape and whether or not they're, you know, they should be regulated and they're selling regulated products. But yeah, from a managed fund perspective there's nothing like that.We all expect managed funds to have an afsl, know what that means and know what their regulatory obligations are.

Yeah, absolutely. Anyway, that's definitely a watch and see.I'll be interested to see if ASIC actually does more on compliance plans of managed funds and MIS management more generally. Yeah, yeah. Number two.

Oh this, this is a bullseye.

Operational failures by super trustees, claims delays, poor IT cyber resilience, fraud risk, bad member service cyber attacks, data breaches. Yeah. Anyway, welcome, welcome to 2026.

Yeah, this just seems a bit backward looking. Here's a bit of a roll up, a summary of all the issues the sector has faced over the last, what, 12, 18 months, which is fair enough.Please don't do any more of that. I, I think I characterize those things as, as bumps in the road. None of them were catastrophic. None of them brought the sector down.None of them, you know, were truly tragic for, for a large number of members.Yeah, there were issues that we cropped up and we need to deal with them and it's a good reminder that we need to plan better, assess risks better rehearse and plans in place.

Definitely. For me the, the thing with all this stuff is it's the, what it does to people's confidence in big super more generally.And that it is, does end up being one of the things that makes it easier for people to end up choosing a self managed super fund when it's perhaps not in their best interest.So yeah, I do think it's on, it's on all of us to continue to improve and fix all those, fix all those issues and make sure the next time there's a massive cyber attack which will obviously come, that we have a similarly good outcome actually from the one we had from the credential stuffing which was one person lost money and the fund covered it in the end.

Yep, I think that was, that was a pretty good result from that. I'm sure the attacks are still coming. I'm sure they're ordered every day and they're just never going to stop.So we just need to be aware of that and take precautions.

Yes. I mean even Mayflower Consulting, which is boutique, which is another word for small. We're not a fund.We don't even have an AFLSL license But just before Christmas I had 3000 hits on the website from China. Wow. Now sadly, I don't think they were looking to buy PDS management services.

What struck me was poor IT infrastructure.I think there's a pretty widespread acknowledgment that that funds have slightly under invested in technology over the years and we need to keep that investment ticking up. Spending on marketing? Probably not the answer. More on infrastructure and core technology, please.

Yes, unfortunately the boring basics, all the things that you just expect to work all the time without fail. But they cost a lot of money these days.

Yeah.

God knows what with it.

So we're talking about petabyte data and very personal data and lots of transactional information all in one place.

Yep, yep.

It's. It's a, it's a risky asset.

Yes. Glad not to be nowhere near that personally. The third one. God, it's we're negative Nellies on a Thursday morning, are we?Consumers losing retirement savings via high risk products pushed through aggressive marketing and unsuitable advice. Look, I don't know about you, but I don't think this is likely to happen in the near term because everyone is on absolute high red alert.

Oh, I give, I give Mr. Longo a slow clap for this one. When were you in the middle of the Shield and First Guardian debacles, Dear, you know, dear industry, please don't let that happen again. Don't.Don't let me fall asleep at the wheel again. Yeah, thought that was.

Yes, yes, ASIC does now have 12 court cases underway in relation to Shield and First Guardian and we expect more. But yeah, it's way too late. The horse has well and truly bolted to the non existent luxury resorts that were going to be built.I believe is one part of the thing that never happened.

I would like to see a crackdown on the lead generation and the aggressive marketing tactics. I know FSL license holders can't.You know there's anti hawking legislation covering them, but it doesn't seem to be anything to prevent them hiring somebody to do the hawking for them. Which is a strange loophole. So I'd love to see that one closed.And yeah, you know, we don't, we don't see lawyers or accountants hiring contact centers full of people to make cold calls on their behalf. I don't think so. I don't see why advisors should be doing it.

Yeah, yeah, well. And it's hardly any advisors. Most of them don't do any of this kind of rubbish.

It is a few bad apples, you're right.

But yeah, the Few bad apples sadly can make quite an unholy mess of things in a short space time.

Yeah, I think that's a real shame as well. We've talked on the show before about the number of financial advisors left in the industry.

Yes.

And we thought we got rid of all the cowboys. Turns out there's still a few left, which is a real shame.

Yeah. So I guess it just shows that level of education doesn't entirely get rid of bad actors. It makes it more difficult to get in in the first place.But if you're planning on not doing the right thing, it's still far too easy to do it.

Yes.

By hiring someone else without the education or the morals to go nuts flogging your dodgy let's buy it off the plan building that you're making. Anyway, I shall not keep going on that. Number four, poor quality financial sustainability reporting and audit practices. So there's kind of one.It's interesting actually because the audits were audited recently by ASIC in September actually last year. But it went fairly unnoticed, I have to say. Unless I'm sure if you're working in finance in a fund or you work for an auditor.I'm sure it was not in the least bit unnoticed. But ASIC did look at a few things that they were really not very happy about.One was your favorite one which is spending on sponsorship versus advertising was not clear which I've listed in the notes as Neil's favorite.

It is. It is,.

Yes.

Yeah. I originally read this and thought it was the quality of audits of publicly listed companies.But I think you're right, it's the quality of audits within super funds mostly.

Yeah. There is a separate one. ASIC did do a separate one looking at auditors more generally, but this is the super specific one.We'll put a link in the show notes. Anyway, if people aren't across this and do want to have a read, it does make for riveting bedtime reading of course.But the interesting thing out of this and I'm surprised it wasn't, it wasn't picked up more more broadly actually one of the things that non industry funds have always looked down their nose at for industry funds is the fact that when you invest in massive unlisted assets, you can revalue them carefully in such a way that it smooths your returns over time. So if you're shooting out, shooting the lights out this year, you can slightly soften your valuation.Would probably be how it would would be would be put and then that gives you a bit more of a kick next year when perhaps things aren't looking quite as rosy. And this has always been something that the platforms have looked at the industry funds and said this is just, it's not good enough how it works.And I must admit I've always rolled my eyes a little bit at that because it's just, it's a little bit.It's a bit born out of jealousy, I think as well, because you can only invest in these massive long term infrastructure things if you know that you are going to be getting money in the front door because you have in place the workplace agreements that specify where the money is going to go. Unlisted asset fair value is how it was described.

I thought the assets had to be valued by a independent professional twice a year and reported to the fund and that there was very little scope for monkeying around with those valuations. But it seems like there's some tinkering going on around the edges.

Yes. Anything they talked about evidence. There's not enough evidence and there's not enough comparability across funds.

Right.

So the method that's used in one fund might be very different to the method that used in another fund. So you can't actually look at them and say everyone has valued these type of assets on the same sort of footing.

Yeah. I know when we had a business valued recently by two different valuation professionals, there was a range of valuation methodologies to choose from.And unless you both chose the same methodology and they did, it did happen to, in this case, they would have used wildly different valuation methods. And even if the same answer or a similar answer, there would be coincidence.So if one values a skyscraper using one method and one fund values skyscraper using a different method. Yeah, there's not a lot of comparability in that. But I think that's a valuation industry question. Like why are there lots of different methods?

Yes. Especially for unlisted, which is another way of saying private market. Right.

Yep.

So the whole issue around private markets and unlisted, that's the same because public markets are listed. So. Yep.

It can be big pieces of infrastructure. It can also be massive private companies. You know, we talk about.

Oh yeah, sure things.

You know, the valuation of Canva has been up and down all over the place and it's very hard to. To value a private company like that until there's some kind of transaction, maybe a fundraising or something that. Yeah. Puts a value on the business.

Yes. And it's that interesting such that it's such a fundamental idea, isn't it around volatility of, of pricing.In fact, I had to explain it to my dad of all people, who is a very smart person in his own field.But he said, he said to me, sarah, why do people invest in shares when it goes up and down all over the place, when you can go invest into property and it's so smooth. And I had to explain to him, dad, if you put a for sale sign out the front of your house every day you are going to be offered a different amount.It's going to vary wildly and some days, of course you won't get any offers. So the volatility is going to be in the millions of dollars against your millions of dollars.If your house is worth 2 million bucks, you might get values from 0 to 1 to 1 and a half to 2 and a half, depending on what happens on that day. It's just that when we have public markets, there's valued in interest. Second, basically every, every time someone goes to buy or sell something.So, yeah, you get this, it looks very different to the outside, but when you look on the inside, which is what this issue is about, you get the same thing, right, Depending how you value it, when you value it, what else has happened that day, whether the value is, you know, what method they're using and all the rest of it, you can, you can get really different valuations.

So people have this perception that that property is a lot less volatile. But if Alan Kohler stood on the news and, you know, he does the. These are the shares that went up today and these are the ones that went down.

Yes.

And these are the, this, the changing currency and commodity prices. If you put postcodes on there, these are the top three.You know, postcodes have risen the most since yesterday and these are the ones that have gone down the most since yesterday. People's perception of the volatility of property would be very different.

That's true. Right, that's what we need to do. Go and get on Alan. Someone, Anyone.

ASIC has raised a concern over ASX's replacement of chess.

Indeed they have.

I prefer custodian models. I think there's a lot of advantages.I don't understand why people are prepared to pay a few dollars per trade for the perceived benefit of the, of the chess system. But it is what, as ASIC describes it, a national, a critical national infrastructure. So, yeah, its replacement needs to go.Well, I don't know how that will impact super funds, who I presume don't use chess. But yeah, it's going to impact retail Investors.

Yeah. I don't, I don't know if they do or don't because the replacement for Chess was supposed to be this fancy blockchain thing that fell over horribly.So now they're having another crack at it right off.

Yes.

Yeah. I mean, it's interesting, isn't it, how much we just rely on the ASX being up and live and working and nothing going wrong. It's almost a.We see it almost like a utility.

Yes. And it should be, it should be treated that way.And I think, you know, we pay them a lot of money to keep the lights on and keep it going and we haven't found a good model for competition yet.In Australia, I noticed that the alternative market CBO is basically pulled up stumps and may find a buyer, but we really just rely on one exchange and it's at risk because of this aging technology.

Yeah, yeah. Yes. It'd be very fascinating to see what happens there. I'm sure there'll be a lot of people, in fact, I know some of them.There are a lot of people working very hard to try and make sure it works better this time. But yeah, I'm not sure how much that will impact. Super. Someone will have to tell us. I'll find someone. Yeah, you can tell us.

Absolutely. That'd be good.

We will.

Let's ASIC's little outlook.

Yes, ASIC's other ones, they had one around. Advanced technology risks. AI decisioning scams harming consumers.

Oh, cool. Yes. Here I am building decisioning systems. AI. Thank you, asic.

Well, I think this is the thing. Is it just these agents, they magnify whatever's happening.So instead of having a call center of people doing something good or nefarious, you can have unlimited number of bots doing something good or nefarious, which if it's good, like processing people's death benefits or insurance claims more quickly Winning.

Yes.

If it's bad, like conning people out of their money.

So there's a bar we need to set for an AI agent whenever it does something. What level of bias is acceptable? What level of harm is acceptable?Self driving cars aren't going to be perfect, but unself driving cars, people Driven cars kill 3,000 people a year in Queensland. So if you go from 3,000 a year to zero. Sorry, it's not 3,000 a year in Queensland. Maybe that's the Australian number.But there's a phenomenal number of people harmed every day on our roads. And self driving cars won't get to zero immediately. That's too high a bar to expect there's going to be self driving cars that harm people.As long as they harm less people than humans driving cars, that's a win. And it's the same for financial services. There's going to be bias.And because the people who trained them and set the models up had some bias, unconscious or conscious, we just need to discover that bias, eliminate it as much as possible.

Yes, I agree.I actually think it's one of the things that has stopped the super system on the whole from doing better with things like helping people move into retirement is we're trying to get it perfect for everybody rather than understanding that if we can make a significant move forward for 95% of the population, 4% of the population, it doesn't make any difference and 1%'s harmed. Well, actually statistically that's a much better outcome, but it's just very hard to say that out loud and it's hard if you're in the 1%.And I also interestingly heard something a little while ago that is more a general criticism of left leaning people is they want things to be perfect and they don't want a single person left behind with whatever the issue is. And while as you say, it's the same as with traffic hack because it's trying to get to zero, doing things that move you towards zero is fantastic.Refusing to act unless the answer is zero is actually highly problematic and stops you making any improvements.

If we want to avoid using AI in this case or advanced technology, we have to put up with higher administration fees than we would otherwise because you did all this work. We're not going to invest in new technology so we're going to be less efficient. And so there's a harm there, there's just a harm.We all get, you know, smaller returns because we're paying, we're in fees to have lots of people do manual work.

It's like the safety of leaving your money in a bank account is safe in that it's not going to go backwards. But actually over the long term your buying power has shrunk.

Yep.

Yeah.So yes, I think it'd be very interesting to see how that plays out and I do think this is one of the areas where there's a lot of work and I know a lot of boards are doing a lot of work around this to try and better understand what's involved and what, what this all means. But I do think it's very important for superannuation executives and a lot of them already doing this To.To work with boards to help them understand this idea of trying to move towards zero, like needing zero harm out of the box means that you don't take any action. So, like, how much harm are you prepared to do to a small number of people in order to get a large number of people a good result?

Yep.

And the last one is regulatory gaps around emerging participants. Digital assets, fintech, unregulated services. I've written in the notes, bloody Bitcoin,.

That would be.

Oh, no, it's actually not Bitcoin that's.

The problem, but yeah, it's all the other coins, mostly.

Yes, Correct. It's an ongoing issue and I really hope that ASIC doesn't come up with which.It looks like they might actually come up with some separate regime for blockchain currencies, which I just fundamentally disagree with, because then you end up with arbitrage between regimes. It has to be the single regime that covers digital and real currency, to my mind.

I thought you meant arbitrage between jurisdictions.So if Australia comes up with a set of regulations that makes it more punitive, for example, to trading Bitcoin in Australia, people will just rent a wallet in some other, you know, Singapore or some other jurisdiction.

Yes, well, there's. There's that too. Right. So you're trying to. You've got to have that within the. Within the thinking as well.

Yeah. I mean, given how long Bitcoin's been around now. Nearly 10 years. More than 10 years. It's.

No, it's more than that.

I think I'm surprised the regulators just haven't. And the government. The regulator can't really.

No. The government has to come up with a. With some legislative. What, legislation?

Yes. We haven't got there yet.

No.

So do you get the sense that ASIC'S going to try and. And preempt something, Preempt some legislation by doing something provocative and preemptive?

I thought I saw something recently, although I might have dreamt it, that. That is on the radar for this year to come out with some kind of regulatory framework or something for digital currencies.But as you say, look, they've been around for a long time. My issue is they just don't any. They don't add any value to the universe.It's complete speculation and it's gambling and I wish they'd just go away, but I know a lot of people disagree with me.

Well, you could say investing in gold and silver and platinum, they're exactly the same. They're just commodities. And the only way you make a return is when somebody is prepared to pay more for it than you did.

Yes, but at least I get used for something.

Oh, a bit, a bit.

I mean the lines of people in the. In the CBD in Sydney, outside the gold bullion shop buying gold bullion was quite something.

Yeah.

Anyway, I'll stop ranting about that on a different one.

I did notice in the news this morning, Binance, which is a cryptocurrency exchange, I don't think it's that popular in Australia. Find $4.3 billion by the US regulator for forgetting to check whether their customers are terrorists.

Good one, team.

Yeah.Yeah, I thought KYC was a pretty well trodden path these days and everybody operating a retail account would check the identity of the customers, but apparently Binance forgot.

And yes, forgot one does put air quotes around the words forgot.

Yeah. So I hope that happens in Australia. Thank you very much. Afsls.

I think the oddstrack requirements are pretty strict here. Mind you, we've still had.We still had absolute shockers like that CBA thing from a while ago when you could deposit more than $10,000 in cash into an ATM and there was no checks.

Yeah, that was a.As far as I understand it, a friend of mine, her brother was this CIO at the time, that was a line of code in an algorithm that commented out by testing and forgot to put it back into production.

Never got commented back in. Yes, de. Commented back in. Yes.Yeah, no, I believe it was definitely, as my favorite quote says, never a tribute to malice, that which can be explained by incompetence.

So thank you, Mr. Longo, for letting us know what your hot topics are for 2026. Makes it interesting reading. We'll put links to the ASIC article in the show Notes. Indeed.Couple of real hot ones there for superannuation folks to look out for and pay attention to. We expect the regulator to keep beating the drum, keep beating down your doors.

So yes, regulators, they've got friends. Asic.

Well, do they all put outlooks like this to let you know what they're going to be looking for?

I think APRA certainly has their sort of corporate plan. Well, so does asic. They have corporate plans for years ahead, so I don't know, it'd be interesting.

Yeah, I know APRA did a system risk outlook back in November. I made short videos about that. If you want to catch up with the that super so shorts channel on YouTube, you'll find all those little videos.There was a series on those risks as well.

So oh, we'll put a link to that as well.

Yeah, I'll make make some videos about the ASIC risks as well.

Yes, excellent. On that note, we'll. We'll see you soon.

Thanks, Sarah. Great to catch up with you again and look forward to seeing you soon.

You too.

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