Australia’s largest superannuation fund, AustralianSuper, has been fined A$27 million and criticised for “inexcusable” behaviour and betraying the trust of its 3.5 million-plus members.
The penalty was imposed by the Federal Court which found the $365 billion fund failed to merge the accounts of 90,700 members, in accordance with section 108A of the Superannuation Industry Act, costing $69 million in multiple administration fees, insurance premiums and lost investment earnings, which has been remediated.
“The Court held this to be a breach of the fundamental duties and obligations AustralianSuper owed to its members, and that it was inexcusable for Australian Super not to have had the processes and systems in place to ensure compliance,” the Australian Securities and Investments Commission (ASIC) said in a media release.
Justice Lisa Hespe said AustralianSuper’s failures to comply with s108A for almost nine years after the section came into effect, identify its non-compliance and remedy it were systemic failings and the result of failing to have appropriate systems and processes.
“The failures should not have happened. The failures are serious and highly concerning,” Hespe said in her judgement.
ASIC Deputy Chair Sarah Court said the penalty reflected the severity of the misconduct by Australia’s largest superannuation fund, which had betrayed its members' trust 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," the Court said.
This continues the increasing regulatory focus on Australia’s $4.5 trillion super (pension) industry which for so long escaped the scrutiny applied to banks, insurance companies, financial planners and other parts of the financial services sector.
It was the first case ASIC had brought as a co-regulator with APRA alleging contraventions of section 52 of the Superannuation Industry (Supervision) Act 1993 (Cth).
In separate proceedings, ASIC has alleged more than 10,000 members and claimants of the building industry super fund CBus were affected by delays in death benefits and total and permanent disability insurance claims.
