ASIC has sued the trustee of AustralianSuper, alleging failures by the fund to address multiple member accounts for a decade.
ASIC alleges that AustralianSuper failed to have adequate policies and procedures to identify members who held multiple AustralianSuper accounts and to merge those accounts, where merger was in the member’s best interests. The fund then continued to charge multiple sets of fees and insurance premiums to these members.
Between 1 July 2013 and 31 March 2023, approximately 90,000 AustralianSuper members were affected, with total cost to members of approximately $69 million.
AustralianSuper is Australia’s largest super fund with over 2.87 million members and $258 billion in member assets as at 30 June 2022, led by chief executive Paul Schroder since 2021.
This is the first case ASIC has brought jointly as a co-regulator with the Australian Prudential Regulation Authority (APRA).
The regulator is particularly concerned as the fund allegedly became aware of the problem as far back as 2018 but failed to take adequate steps to address it until late 2021 and early 2022.
ASIC claims that, between 2019 and 2023, AustralianSuper failed to:
- Set out a procedure to identify and merge multiple accounts of members in accordance with section 108A of the Superannuation Industry Act
- Efficiently identify, escalate and rectify the ongoing failure to comply with that section and remediate affected members
- Promptly identify and merge multiple accounts in accordance with the required procedures
- Do all things necessary to ensure its financial services were provided efficiently, honestly and fairly
- Exercise the same degree of care, skill and diligence as a prudent superannuation trustee would have exercised, and
- Perform its duties and exercise its powers as a superannuation trustee in the best interests of its members.
ASIC deputy chair, Sarah Court, said: “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.
“ASIC expects that super 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.”
AustralianSuper is already remediating members who held multiple accounts within the fund at and from 30 June 2014, for the period 1 July 2014 to 31 March 2023.
A statement from AustralianSuper said: “AustralianSuper regrets that its processes to identify and combine multiple accounts did not cover all instances of multiple member accounts. This should not have happened, and we apologise unreservedly to members.
“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.
“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.
“AustralianSuper will continue to work with ASIC to bring these proceedings to a resolution.”
ASIC is seeking declarations, pecuniary penalties and other orders against AustralianSuper.
The date for the first case management hearing is yet to be scheduled.
