AustralianSuper, the country’s largest superannuation fund, is facing a Federal Court action filed by the Australian Securities and Investments Commission (ASIC). The ASIC alleges that AustralianSuper failed to consolidate thousands of duplicate accounts, resulting in members paying $69 million in fees. ASIC claims that the fund lacked the necessary policies and procedures to identify and merge multiple accounts held by around 90,000 members.
ASIC Deputy Chair Sarah Court emphasized the financial consequences for members who end up paying multiple sets of fees, eroding their superannuation balance over time. The alleged failure to merge duplicate accounts occurred between July 1, 2013, and March 31, 2023. Although AustralianSuper was aware of the issue in 2018, it did not take appropriate action to address it until late 2021 and early 2022.
In December 2022, the fund reported a potential failure to comply with its obligations to merge duplicate accounts to ASIC, leading the financial watchdog to include the superannuation fund in its broader review of trustee practices. ASIC expects superannuation funds to prioritize their members’ interests and promptly address issues that result in multiple sets of fees and insurance premiums. If a trustee has failed to comply with its obligations, members should be compensated.
ASIC alleges that AustralianSuper did not exercise the same level of care, skill, and diligence as a prudent superannuation trustee would have. As a result, ASIC is seeking declarations, pecuniary penalties, and other orders against the fund. AustralianSuper expressed regrets for the matter and stated that it has completed the remediation program initiated earlier this year. The fund apologized to members for its failure to identify and combine multiple accounts.
The superannuation fund has cooperated fully with ASIC and the Australian Prudential Regulation Authority (APRA) regarding the issue. It also cooperated with ASIC separately for the industry review of multiple member account management in 2022. AustralianSuper has strengthened its processes to identify and combine multiple accounts and pledged to continue working with ASIC to resolve the proceedings.
This is the first case in which ASIC, in collaboration with APRA, has alleged breaches of section 52 of the Superannuation Industry (Supervision) Act 1993, outlining a trustee’s duties. According to ASIC, approximately 3 million Australians have multiple superannuation accounts as of June 30, 2022, and unintended multiple accounts continue to be a significant concern.
AustralianSuper boasts one in eight workers as its members and manages over $300 billion in retirement savings for more than 3.2 million members.