The Australian Securities and Investments Commission (ASIC) will look to take strong, targeted enforcement action in the coming months and into 2024, as part of its focus on member outcomes in the superannuation sector. The enforcement focus comes after ASIC’s recent enforcement and regulatory update.
This article explores ASIC’s actions against AustralianSuper, Australia’s largest super fund, relating to not properly addressing multiple superannuation accounts. This is the first case that ASIC has brought in its capacity as a co-regulator with APRA alleging contraventions of section 52 of the Superannuation Industry (Supervision) Act 1993 that relates to the conduct of trustee’s duties.
ASIC commences civil penalty proceedings
In a significant move, ASIC has launched civil penalty proceedings against the trustee of AustralianSuper. ASIC alleges that AustralianSuper failed to address multiple member accounts over nearly a decade, leading to financial consequences for affected members.
According to ASIC Deputy Chair Sarah Court, AustralianSuper lacked adequate policies and procedures to identify and merge multiple accounts when it was in members’ best interests. This failure resulted in the continued charging of multiple fees and insurance premiums, eroding the superannuation balances of approximately 90,000 members between July 2013 and March 2023, with a total cost of around $69 million.
ASIC expressed concern that AustralianSuper, despite being aware of the issue in 2018, did not take sufficient steps to investigate and resolve the problem until late 2021 and early 2022. Court emphasised ASIC’s expectation for superannuation funds to prioritise their members and promptly address issues causing financial harm.
ASIC’s claims against AustralianSuper
ASIC claims that, between 2019 and 2023, AustralianSuper failed to:
- Set out a procedure to identify and merge multiple accounts of members in accordance with section 108A of the Superannuation Industry Act,
- Efficiently identify, escalate, and rectify the ongoing failure to comply with that section and remediate affected members,
- Promptly identify and merge multiple accounts in accordance with the required procedures,
- Do all things necessary to ensure its financial services were provided efficiently, honestly, and fairly,
- Exercise the same degree of care, skill and diligence as a prudent superannuation trustee would have exercised, and
- Perform its duties and exercise its powers as a superannuation trustee in the best interests of its members.
ASIC is seeking declarations, pecuniary penalties, and other orders against AustralianSuper.
Key takeaways
ASIC’s focused enforcement action against AustralianSuper underscores the regulator’s commitment to member outcomes in the superannuation sector. The case highlights AustralianSuper’s alleged failure to address multiple member accounts, causing financial harm to around 90,000 members.
