Australian Super sued over multiple accounts
In May, Australian Super announced it would be refunding close to $70 million in administration fees and insurance premiums to about 100,000 members whose multiple accounts had gone undetected. The average impacted member was to receive $650.
Now, the corporate regulator has launched civil penalty proceedings against the nation's largest superannuation fund, saying the fund failed to have adequate policies and procedures to identify members who held more than one account and merge those accounts where it was deemed to be in the member's best interests.
ASIC says the conduct went on for close to a decade, from July 1, 2013, to March 31, 2023. This, despite it being legislated in 2013 that funds must undertake intra-fund consolidation at least once a year.
ASIC also claims Australian Super was aware of the multiple accounts as far back as February 2018 - at which time there was at least 43,605 members with more than one account - but did not sufficiently move to address the issue until late 2021 and early 2022.
This is the first case to be brought by ASIC in its capacity as a co-regulator with APRA, overseeing the conduct of super trustees' duties.
Australian Super self-reported the bungle to ASIC in December 2022 and was subsequently included in ASIC's review of how trustees are monitoring and merging multiple accounts. That review urged trustees to do better on this front, saying poor practices were causing member detriment.
In court documents, ASIC said that between 2019 and 2023, the super fund failed to have a procedure for identifying and merging multiple member accounts as required by the SIS Act; failed to efficiently identify, escalate or rectify the ongoing issue; didn't promptly identify and merge multiple accounts as required by law; and didn't do all things necessary to ensure it was acting efficiently, honestly and fairly.
It also said Australian Super didn't "exercise the same degree of care, skill and diligence as a prudent superannuation trustee would have", or "perform its duties and exercise its powers as a superannuation trustee in the best interests of its members."
Documents show Australian Super had processes in place for tackling multiple accounts, however they largely relied on members actively opting in to having their accounts combined, and that the processes in place were not sufficient to meet the SIS Act requirements.
"The proliferation of unintended multiple superannuation accounts is a longstanding problem in the superannuation sector which has resulted in the erosion of members' superannuation balances through the payment of multiple administration fees, insurance premiums and the lost opportunity to earn investment returns on those amounts," ASIC stated in its filing.
According to the Productivity Commission, unnecessary multiple accounts can leave someone over $50,000 worse off in retirement.
"Australian Super 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," the fund said.
It said the remediation program for the matter is now "substantially complete" and that it has since strengthened processes to identify and combine multiple accounts.
"Australian Super will continue to work with ASIC to bring these proceedings to a resolution," it said.
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