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AustralianSuper headed to court over multiple accounts fiasco

ASIC has launched civil proceedings against Australia’s biggest super fund over allegations it failed to consolidate the accounts of 90,000 members and continued to charge them fees.
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The regulator alleges that for almost ten years AustralianSuper failed to identify members who held multiple accounts and merger them where a merger was in the member’s best interests, continuing to charge them multiple sets of fees and insurance premiums for a total cost of nearly $70 million. Approximately 90,000 members were affected between 2013 and 2023.

“Failing to merge duplicate accounts within a fund can have significant financial consequences for members who end up paying multiple sets of fees, eroding their superannuation balance over time,” said ASIC deputy chair Sarah Court.

“ASIC expects that superannuation funds will put their members first and promptly address issues that cause members to face multiple sets of fees and insurance premiums. We expect these issues to be identified and rectified quickly, including compensating members if a trustee has failed to comply with its obligations.”

ASIC also alleges that AustralianSuper was aware of the issue in 2018, but didn’t take steps to investigate or resolve it until late 2021 and early 2022; it ultimately self-reported the issue in December 2022. In a statement, the fund said that it “regrets” that its processes to identify and combine multiple accounts didn’t cover all instances of multiple member accounts and apologised “unreservedly”.

“AustralianSuper self-reported this issue and has fully cooperated with ASIC and APRA on this matter and, separately, with ASIC for its 2022 industry review of the management of multiple member accounts,” an AustralianSuper spokesperson said.

“AustralianSuper implemented a member remediation program for this matter earlier this year, which is now substantially complete. Having identified this issue, we have strengthened our processes to identify and combine multiple accounts and remain committed to minimising these for members.”

ASIC is seeking declarations, pecuniary penalties and other orders against AustralianSuper.

In early 2022, AustralianSuper was among a number of industry funds – which usually hold around a dollar of shareholder capital – that began to build penalty reserves amidst concern that a financial penalty could leave a fund insolvent. Unlike some funds, AustralianSuper built its penalty war chest from its administration reserve rather than new member fees, but left the door open to future administration fee hikes.

“Super fund trustees have become subject to increasingly onerous laws and regulations as well as increasing regulatory supervision, a heightened risk of enforcement by regulators and greater legal obligations,” AustralianSuper said in a note to members at the time.

“Recent amendments to superannuation laws expand the circumstances in which a trustee is prevented from using fund assets and make it clear that fund assets cannot be used to pay for fines and penalties that may be imposed under Commonwealth laws.”

Staff Writer


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