Australia’s largest superannuation fund failed to inform members of duplicate accounts, leading to multiple fees and unnecessary charges.
Australia’s largest superannuation fund, AustralianSuper, has been fined $27 million for failing to inform more than 90,000 members that they had duplicate accounts that should have been merged.
Federal Court Justice Lisa Hespe ruled that the company had contravened the Superannuation Industry Act, describing its lack of safeguards as “inexcusable.”
“The penalties in this case need to be large enough to deter other superannuation fund trustees from failing to diligently discharge their duties to act in members’ best financial interests,” she said.
“I am satisfied that AustralianSuper is unlikely to engage in this contravention again given the remedial action it has taken and its acceptance of its wrongdoing.”
Members Lost $69 Million Due to Errors
AustralianSuper reported the issue to the Australian Securities and Investment Commission (ASIC) in December 2021.
The error caused the people affected to lose a combined $69 million in multiple administration fees, insurance premiums, and investment earnings—about $766 per customer.
Despite the fund’s cooperation during the investigation and subsequent Federal Court proceedings, ASIC pursued the case, arguing that AustralianSuper took three years to address the issue after becoming aware of it.
AustralianSuper Apologises, Promises Reforms
AustralianSuper CEO Paul Schroder acknowledged the failure, stating the company had since taken corrective action.
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“We found this mistake, we reported it, we apologised to impacted members, we compensated them, and we’ve improved our processes to prevent this from happening again,” he said.
“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.”
ASIC: ‘Severe Misconduct’
ASIC Deputy Chair Sarah Court criticised AustralianSuper’s delay in addressing the issue, calling it a betrayal of trust.
“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,” she said.
“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 Orders Transparency Measures
In addition to the financial penalty, the court ordered that the company display an unavoidable message about the court decision on its website and the first screen members see when they log in.
With more than 3.5 million members and managing 14.6 percent of superannuation accounts across the country, AustralianSuper added $26.7 billion to the retirement savings pool last year.
