AustralianSuper fined $27 million for 'betraying members'

The Federal Court has slapped AustralianSuper with a $27 million fine for dragging its feet on a multiple account bungle that lasted more than four years.

Judge Hespe found that AustralianSuper failed to promptly identify and merge members' multiple accounts in the way the law required for the period between March 13, 2019 and May 11, 2023.

Some 42,551 beneficiaries were affected.

ASIC instigated action in October 2024, alleging that the $360 billion super fund's misdeeds stretched back 10 years.

AustralianSuper admitted that, between July 1, 2013, and June 19, 2022, it failed to have adequate policies and procedures to identify members and act on the issue.

In that period, there were 90,788 affected members who incurred about $69 million in losses from multiple administration fees and insurance premiums and investment earnings.

Between May and June 2023, AustralianSuper paid about $69 million to 90,000 affected members as part of its remediation program since July 1, 2013.

In determining the $27 million penalty applicable for the 2019 and 2023 period, Judge Hespe said AustralianSuper already took "significant steps to remediate the harms caused by its failures and that it has, since identifying its misconduct, significantly uplifted its obligations and incident management systems and processes in an effort to ensure this conduct does not recur" and took this into account.

In 14 days' time AustralianSuper must also publish the determination and details of it on its website.

AustralianSuper self-reported to the regulators in December 2021.

"We then informed impacted members, completed a comprehensive remediation program to compensate them, and cooperated at all stages with the regulators," AustralianSuper chief executive Paul Schroder said.

"We found this mistake, we reported it, we apologised to impacted members, we compensated them, and we've improved our processes to prevent this happening again."

The super fund made a provision for the penalty in its 2024 financial year accounts. Schroder said member administration fees did not increase to cover it.

"Multiple member accounts are a problem across our industry and for several years our process wasn't comprehensive enough to meet our obligations to members. We've fixed that now and we continue to review and improve our services, so we provide members with the support and guidance they expect and deserve," he said.

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," Court said.

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 is currently investigating AustralianSuper over delays in paying out death benefits after it remediated members last year.

This article first appeared on Financial Standard

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