The nation’s largest super fund, AustralianSuper, has been slapped with a $27 million fine after it was found the company failed to merge thousands of customer member accounts for almost nine years.

From July 2013 to March 2023, approximately 90,700 AustralianSuper members had multiple accounts that should have been merged, incurring $69 million in losses through multiple administration fees, insurance premiums and lost investment earnings.

The breach was investigated by the Australian Securities Investments Commission (ASIC), which assessed the issue after it was reported by the Melbourne-based super fund in late 2021. Following the self-report, AustralianSuper was included in ASIC’s broader review of trustee practices.

Findings from the review, which were published in June 2023, identified poor practices resulting in consumer harm, prompting the agency to call on superannuation trustees to review their policies and procedures regarding duplicate member accounts.

ASIC filed civil proceedings in the Federal Court against AustralianSuper when it closed its investigation three months after publishing the review. All affected members have been remediated.

“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,” ASIC chair Sarah Court 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.”

In handing down the ruling, Justice Lisa Hepse said it was inexcusable for AustralianSuper not to have had processes and systems in place to endure 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,” Hepse added.

“Some of the internal correspondence... suggested that some within AustralianSuper lost sight of the fact that AustralianSuper was required to act in the best interests of individual members when considering the merger of multiple accounts, rather than seeking to hold on to as many accounts as possible.

“Such correspondence is demonstrative of a lack of appreciation of the gravity of the conduct and a fundamental lack of understanding of the obligations and duties of AustralianSuper.”

Established in 2006 through the merger of the Superannuation Trust of Australia (STA) and the Australian Retirement Fund (ARF), AustralianSuper manages more than $365 billion of retirement savings on behalf of more than 3.5 million members.

AustralianSuper said it informed impacted members, completed a comprehensive remediation program to compensate them and cooperated at all stages with the regulators. 

“We found this mistake, we reported it, we apologised to impacted members, we compensated them, and we’ve improved our processes to prevent this happening again,” AustralianSuper chief executive Paul Schroder 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, so we provide members with the support and guidance they expect and deserve.”

AustralianSuper has also been ordered to pay up to $500,000 in ASIC’s legal costs.

Help us deliver quality journalism to you.As a free and independent news site providing daily updates during a period of unprecedented challenges for businesses everywherewe call on your support