ASIC seeks $27 million penalty against Australian Super

By

Published on

ASIC is seeking a major $27 million penalty against AustralianSuper in the Federal Court.

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 doing so was in the member's best interests.

ASIC 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 seeks $27m penalty against AustralianSuper

The regulator said in this case, approximately 90,000 AustralianSuper members were affected, with total cost to members of approximately $69 million.

ASIC's lawyer has asked the court to impose the massive $27 million penalty against the super fund, saying it reflects the length of time the contraventions continued for and that it would act as a deterrent to other super funds.

"The penalties that we say are appropriate, $27 million, we say do have that necessary sting or burden for general deterrence purposes and, in circumstances where it does seem that AustralianSuper has done a lot, a very great deal, to bring itself into a position where this won't happen again and to, as it were, make amends for what it did do, we think that specific deterrence is of a lower order than general deterrence in this case and that whatever penalty would be necessary for specific deterrence is comfortably within that $27 million," Tim Begbie KC told the court.

Justice Lisa Hespe agreed the contraventions were serious and that there was a concern about the effect on members' retirement savings.

"I will make it clear that I am very concerned that this conduct is serious.

"It is serious, not just for the consequences for members, but, to me, there is a pattern emerging in some of these cases about priority given to systems and to problems that emerge in automated systems."

"I understand that there are competing demands on the attention and funds of corporates, superannuation trustees and the like, but, to me, the underlying conduct that is of serious concern is the priority given to and the focus that needs to be given in this modern age to ensuring the systems do what they're supposed to do."

Justice Hespe added that in this case, a large penalty may be warranted against the super fund.

"It's not so much that problems emerge. Problems will always emerge.

"Not prioritising the rectification of problems, because it's too hard, it's not interesting, it's going to divert resources from new projects or new ideas or marketing, whatever it might be, is of real concern and I want to make it clear that that conduct is serious, and I do regard the penalties in this case do warrant the sums in the nature of those proposed, because the conduct is extremely serious."

This article first appeared on Financial Standard

Get stories like this in our newsletters.

Related Stories

TAGS

Eliza Bavin is a senior journalist at Financial Standard and one of the hosts of the Financial Standard Podcast. She has previously worked at Sky News, Yahoo Finance and Channel 9. She has a Bachelor's degree in communications (journalism) from Charles Sturt University.
Comments
Lily Lin
October 12, 2024 8.36am

Great information!

However, has ASIC ever investigate how many of those affected members purposely want to keep multiple accounts?

Also is the penalty a penalty be shared out of members' accounts? If so, how is that fair?

helly ripphin
October 15, 2024 4.44pm

agree Lilly. THere are valid reasons to have multiple accounts, such as separating taxable from non taxable. This is due to the massive Death Tax that is imposed on those who cannot pop out kids or don't have a spouse or ex spouse to donate the money to, TAX FREE. You can even give it to an ex spouse who doesn't even live with you !! How ridiculous and discriminatory is that !! Everyone else is whacked a massive 17% (15 plus Medicare levy) just because they don't have a spouse or kids. Forcing accounts to merge means you mix up taxable with non taxable. The only way around it is to have accounts with different super funds. Which also means more fees. merging accounts is a way for the ATO to get more money out of super that can't be gifted without it being taxed. Note your estate is taxed at 17%, even if you leave the entire amount to CHARITY. If you gifted it to charity when you are alive, you get a tax deduction at your marginal rate. But try that when you are dead and you will be taxed at 17%.

Christine Hoy
October 12, 2024 9.15am

Hi Eliza

Will the penalty to Australian Super affect members?

Thanks

Helen Anderson
October 12, 2024 9.43am

Will Australian Super payback admin charges to those customers that had duplicate superannuation accounts with them?

Wendy Willgoose
October 13, 2024 12.05pm

After losing 69 million of members monies , will it not be the super members that end up forking out the 27million to ASIC in admin fees.

Robert McElveney
October 15, 2024 8.53am

Taking $27 mil out of Aussie Super to pay a fine that affects members investments is crazy, there has to be another form of penalising the perpetrators without hitting the members with a double whammy?