AustralianSuper Fined $17 Million for Duplicate Account Failures

AustralianSuper, the country's largest superannuation fund, has been fined $17 million for failing to merge duplicate member accounts, resulting in significant losses for affected members. The Federal Court ruled that AustralianSuper breached its duties and obligations to its members by not promptly identifying and merging multiple accounts or remediating affected members.

Between 1 July 2013 and 31 March 2023, approximately 90,700 AustralianSuper members had multiple accounts that should have been merged. These members incurred approximately $69 million in losses through multiple administration fees, insurance premiums, and lost investment earnings. All affected members have been remediated.

AustralianSuper admitted to the failures and apologized to its members, stating that it had not had appropriate systems and processes in place to ensure compliance with the specific legislative requirement. The fund also noted that it had taken remedial action and accepted its wrongdoing.

ASIC Deputy Chair Sarah Court said, "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. 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."

The Federal Court held that AustralianSuper's failures to comply with section 108A of the Superannuation Industry (Supervision) Act (SIS Act) 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. The Court also noted that issues were not escalated within AustralianSuper, and senior management oversight was absent, resulting in the dereliction of a fundamental regulatory obligation intended to further the best interests of members.

In addition to the $17 million fine, AustralianSuper is required to pay ASIC's costs related to the case, not exceeding $500,000, within 30 days. The fund is also required to publish a notice on its website and mobile app, informing members about the court ruling on the failure to merge duplicate accounts within 14 days.

This ruling serves as a reminder to superannuation funds of their obligations to act in the best interests of their members and to maintain appropriate systems and processes to ensure compliance with relevant legislation. It also highlights the importance of prompt identification and rectification of any issues that cause members to face multiple sets of fees and insurance premiums.