AustralianSuper, the trustee of Australia’s largest superannuation fund, will pay a $27 million penalty after the Federal Court today found that it failed to merge multiple member accounts.
The Court held this to be a breach of the fundamental duties and obligations AustralianSuper owed to its members, and that it was inexcusable for Australian Super not to have had the processes and systems in place to ensure compliance.
In her judgment, Justice Hespe said, ‘AustralianSuper’s failures to comply with s 108A for almost nine years after the section came into effect, to identify its non-compliance and to take steps to remedy that non-compliance were systemic failings and as explained above, were the result of failing to have appropriate systems and processes in place. The failures should not have happened. The failures are serious and highly concerning.’
ASIC Deputy Chair Sarah Court said, ‘This penalty reflects the severity of the misconduct by Australia’s largest superannuation fund which betrayed the trust of its members and did not act in their best financial interests.
‘This was exacerbated by a systemic failure to escalate and remediate the issue once it was identified.
‘Improving services to superannuation fund members is a strategic priority for ASIC and we will continue to take strong action where we consider that members are not getting the service they deserve from their superannuation trustees.’
In the period 1 July 2013 until 31 March 2023, approximately 90,700 AustralianSuper members had multiple accounts that should have been merged. These members incurred approximately $69 million in losses through multiple administration fees, insurance premiums and lost investment earnings.
All affected members have been remediated.
Justice Hespe also said, ‘It is inexcusable for [AustralianSuper] to not have had processes and systems in place to ensure compliance with a specific legislative requirement… Its systems also failed to ensure that repeated human errors in relation to the failure to merge the multiple accounts were prevented or promptly identified and corrected.’
‘Justice Hespe further said that the contraventions ‘involved a breach of the fundamental duties and obligations AustralianSuper owed to its members…’
‘…Issues were not escalated [within AustralianSuper] and senior management oversight was absent, resulting in the dereliction of a fundamental regulatory obligation intended to further the best interests of members. Under-resourcing and a failure to prioritise compliance with s 108A of the SIS Act resulted in unacceptable delays.…
Some of the internal correspondence... suggested that some within AustralianSuper lost sight of the fact that AustralianSuper was required to act in the best interests of individual members when considering the merger of multiple accounts, rather than seeking to hold on to as many accounts as possible. Such correspondence is demonstrative of a lack of appreciation of the gravity of the conduct and a fundamental lack of understanding of the obligations and duties of AustralianSuper.’
This was the first case that ASIC has brought in its capacity as a co-regulator with APRA alleging contraventions of section 52 of the Superannuation Industry (Supervision) Act 1993 (Cth).
ASIC's Moneysmart website has information about how to consolidate super accounts.
One of ASIC’s enforcement priorities is member services failures in the superannuation sector. In separate proceedings, ASIC has alleged more than 10,000 members and claimants of CBus were impacted by delays to death benefits and total and permanent disability insurance claims.
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Background
Unintended multiple superannuation accounts are a significant issue for Australian consumers. ATO data shows that as at 30 June 2024, around four million people had two or more superannuation accounts.
AustralianSuper is Australia’s largest super fund, with over 3.5 million members and $365 billion in member assets. AustralianSuper has remediated members who held multiple accounts within the fund at and from 30 June 2014, for the period 1 July 2014 to 31 March 2023.
In December 2021, AustralianSuper reported to ASIC a potential failure to comply with their obligations to consolidate duplicate accounts. AustralianSuper was then subsequently included in ASIC’s broader review of trustee practices. ASIC published the findings from this review in June 2023, when we called on superannuation trustees to review their policies and procedures regarding duplicate members accounts, after the review identified poor practices resulting in consumer harm (23-175MR).
ASIC filed civil proceedings in the Federal Court at the conclusion of its investigation on 8 September 2023 (23-249MR).