AustralianSuper fined AU$27m
24 February 2025 Australia
Image: mehaniq41/stock.adobe.com
AustralianSuper will pay an AU$27 million penalty for failing to merge multiple member accounts.
The Federal Court found this to be a breach of the fundamental duties and obligations AustralianSuper owed to its members, and that it was “inexcusable” not to have had the processes and systems in place to ensure compliance.
In her judgment, Justice Hespe said: “AustralianSuper’s failures to comply with s 108A for almost nine years after the section came into effect, to identify its non-compliance, and to take steps to remedy that non-compliance were systemic failings, and as explained above, were the result of failing to have appropriate systems and processes in place.
“The failures should not have happened. The failures are serious and highly concerning.”
AustralianSuper is Australia’s largest super fund, with more than 3.5 million members and AU$365 billion in member assets.
Between July 2013 and March 2023, approximately 90,700 AustralianSuper members had multiple accounts that should have been merged.
These members incurred approximately AU$69 million in losses through multiple administration fees, insurance premiums, and lost investment earnings.
Justice Hespe added: “It is inexcusable for [AustralianSuper] to not have had processes and systems in place to ensure compliance with a specific legislative requirement.
“Its systems also failed to ensure that repeated human errors in relation to the failure to merge the multiple accounts were prevented or promptly identified and corrected.”
In December 2021, AustralianSuper reported to the Australian Securities and Investments Commission (ASIC) a potential failure to comply with their obligations to consolidate duplicate accounts.
AustralianSuper was then included in the commission’s broader review of trustee practices.
ASIC filed civil proceedings in the Federal Court at the conclusion of its investigation in September 2023.
This was the first case that brought ASIC in its capacity as a co-regulator with the Australian Prudential Regulation Authority (APRA) alleging contraventions of section 52 of the Superannuation Industry (Supervision) Act 1993.
Commenting on the ruling, Sarah Court, deputy chair at ASIC, says: “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.”
AustralianSuper subsequently remediated all members who held multiple accounts within the fund at and from 30 June 2014, for the period 1 July 2014 to 31 March 2023.
The Federal Court found this to be a breach of the fundamental duties and obligations AustralianSuper owed to its members, and that it was “inexcusable” not to have had the processes and systems in place to ensure compliance.
In her judgment, Justice Hespe said: “AustralianSuper’s failures to comply with s 108A for almost nine years after the section came into effect, to identify its non-compliance, and to take steps to remedy that non-compliance were systemic failings, and as explained above, were the result of failing to have appropriate systems and processes in place.
“The failures should not have happened. The failures are serious and highly concerning.”
AustralianSuper is Australia’s largest super fund, with more than 3.5 million members and AU$365 billion in member assets.
Between July 2013 and March 2023, approximately 90,700 AustralianSuper members had multiple accounts that should have been merged.
These members incurred approximately AU$69 million in losses through multiple administration fees, insurance premiums, and lost investment earnings.
Justice Hespe added: “It is inexcusable for [AustralianSuper] to not have had processes and systems in place to ensure compliance with a specific legislative requirement.
“Its systems also failed to ensure that repeated human errors in relation to the failure to merge the multiple accounts were prevented or promptly identified and corrected.”
In December 2021, AustralianSuper reported to the Australian Securities and Investments Commission (ASIC) a potential failure to comply with their obligations to consolidate duplicate accounts.
AustralianSuper was then included in the commission’s broader review of trustee practices.
ASIC filed civil proceedings in the Federal Court at the conclusion of its investigation in September 2023.
This was the first case that brought ASIC in its capacity as a co-regulator with the Australian Prudential Regulation Authority (APRA) alleging contraventions of section 52 of the Superannuation Industry (Supervision) Act 1993.
Commenting on the ruling, Sarah Court, deputy chair at ASIC, says: “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.”
AustralianSuper subsequently remediated all members who held multiple accounts within the fund at and from 30 June 2014, for the period 1 July 2014 to 31 March 2023.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
