The regulator alleges the largest superannuation failed to address multiple member accounts.
ASIC takes legal action against AustralianSuper
ASIC has begun civil penalty proceedings against the trustee of Australia’s largest superannuation fund, AustralianSuper, alleging failures to address multiple member accounts.
ASIC alleges that for almost 10 years, AustralianSuper failed to have adequate policies and procedures to identify members who held multiple AustralianSuper accounts and to merge those accounts, where a merger was in the member’s best interests.
AustralianSuper then continued to charge multiple sets of fees and insurance premiums to these members.
“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 deputy chair Sarah Court said.
Between 1 July 2013 and 31 March 2023, approximately 90,000 AustralianSuper members were affected at a total cost to members of approximately $69 million.
ASIC said it was concerned that despite AustralianSuper allegedly being aware in 2018 of the number of multiple member accounts and possible gaps in its policies and procedures, it did not take adequate steps to investigate and resolve the issue until late 2021 and early 2022.
“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,” Ms Court said.
“We expect these issues to be identified and rectified quickly, including compensating members if a trustee has failed to comply with its obligations.”
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.
- Perform its duties and exercise its powers as a superannuation trustee in the best interests of its members.
ASIC was seeking declarations, pecuniary penalties and other orders against AustralianSuper with the date for the first case management hearing yet to be scheduled.
A spokesperson for AustralianSuper said that the fund “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.”
The spokesperson said the fund implemented a member remediation program over the matter earlier this year which they said was 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,” the spokesperson said.
“AustralianSuper will continue to work with ASIC to bring these proceedings to a resolution.”
This is 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 that relates to the conduct of trustee’s duties.
As at 30 June 2022, approximately 3 million people had multiple superannuation accounts and a significant proportion of those are held within the same fund (data provided by the ATO shows that, as of 31 May 2023, over half a million members had two or more accounts within the same fund).
AustralianSuper is Australia’s largest super fund, with over 3.2 million members and more than $300 billion in member assets. It is 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.
In December 2022, AustralianSuper reported a potential failure to comply with its obligations to consolidate duplicate accounts to ASIC. AustralianSuper was then subsequently included in ASIC’s broader review of trustee practices.
ASIC published the findings from this review in June 2023, when it called on superannuation trustees to review their policies and procedures regarding duplicate member accounts, after the review identified poor practices resulting in consumer harm.