AustralianSuper, the country’s largest superannuation fund, has been slapped with a Federal Court action after allegedly failing to consolidate thousands of duplicate accounts, costing members $69 million in fees.
The Australian Securities and Investments Commission (ASIC) filed legal action accusing AustralianSuper of not having the right policies and procedures to identify—and merge—multiple accounts held by about 90,000 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 on Sept. 8.
ASIC said that the alleged failure happened between July 1, 2013, and March 31, 2023.
Despite AustralianSuper allegedly having knowledge of the problem in 2018, it did not take the appropriate steps to investigate and address the concern until late 2021 and early 2022.
In December 2022, the fund reported to ASIC a potential failure to comply with its obligations to merge duplicate accounts, prompting the financial watchdog to include the superannuation fund in its broader review of trustee practices.
“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.”
The financial watchdog said that AustralianSuper failed to practice the same degree of care, skill, and diligence, as a prudent superannuation trustee would have implemented. ASIC is seeking declarations, pecuniary penalties, and other orders against the superannuation fund.
Meanwhile, AustralianSuper expressed its apologies for the matter and said that it has completed the remediation program it started earlier this year.
“AustralianSuper regrets that its processes to identify and combine multiple accounts did not cover all instances of multiple member accounts,” a spokesperson for the superannuation fund said. “This should not have happened, and we apologise unreservedly to members.”
AustralianSuper said that it has also fully cooperated with ASIC and the Australian Prudential Regulation Authority (APRA) on the matter. It also cooperated with ASIC separately for its industry review of the management of multiple member accounts in 2022.
“Having identified this issue, we have strengthened our processes to identify and combine multiple accounts and remain committed to minimising these for members,” the AustralianSuper spokesperson said. “AustralianSuper will continue to work with ASIC to bring these proceedings to a resolution.”
According to ASIC, this is the first case it has brought in its capacity as a regulator with APRA alleging breaches of section 52 of the Superannuation Industry (Supervision) Act 1993, which outlines a trustee’s duties.
ASIC noted that about 3 million people in Australia have multiple superannuation accounts, as of June 30, 2022. It added that having unintended multiple superannuation accounts remains a significant concern among Australians.
AustralianSuper said that one in eight workers count as its members and that it manages more than $300 billion in retirement savings on behalf of more than 3.2 million members.
