ASIC alleges AustralianSuper took $69m from members by double dipping

ASIC alleges AustralianSuper took $69m from members by double dipping

Photo: Melissa Walker Horn, via Unsplash.

Australia's largest superannuation fund has been accused of double dipping on fees for almost a decade, with the corporate watchdog alleging AustralianSuper failed to identify or address members with multiple accounts that could have been merged.

The Australian Securities and Investments Commission (ASIC) estimates 90,000 AustralianSuper members were affected by the alleged practice between July 2013 and the end of March this year, costing members a total of $69 million.

ASIC has filed civil penalty proceedings against the trustee of AustralianSuper over allegedly charging multiple sets of fees and insurance premiums to members, for whom merging accounts would have been in their best interest. This is the first case for the watchdog acting as co-regulator with the Australian Prudential Regulation Authority (APRA).

"Failing to merge duplicate accounts within a fund can have significant financial consequences for members who end up paying multiple sets of fees, eroding their superannuation balance over time," says ASIC deputy chair Sarah Court.

ASIC is concerned that despite AustralianSuper allegedly being aware in 2018 of the number of multiple member accounts within the fund and possible gaps in its policies and procedures, it did not take adequate steps to investigate and resolve the issue until late 2021 and early 2022.

"ASIC expects that superannuation funds will put their members first and promptly address issues that cause members to face multiple sets of fees and insurance premiums," says Court.

"We expect these issues to be identified and rectified quickly, including compensating members if a trustee has failed to comply with its obligations."

ASIC is seeking declarations, pecuniary penalties and other orders against AustralianSuper, which has more than 3.2 million members and manages more than $300 billion in member assets. One in eight Australians is a member of the fund.

In response, a spokesperson says AustralianSuper regrets that its processes to identify and combine multiple accounts did not cover all instances of their existence.

"This should not have happened, and we apologise unreservedly to members," the spokesperson says.

"AustralianSuper self-reported this issue and has fully cooperated with ASIC and APRA on this matter and, separately, with ASIC for its 2022 industry review of the management of multiple member accounts.

"AustralianSuper implemented a member remediation program for this matter earlier this year, which is now substantially complete."

The spokesperson says the super fund's processes have been strengthened to identify and combine multiple accounts, and it maintains a commitment to minimising these instances for members.

"AustralianSuper will continue to work with ASIC to bring these proceedings to a resolution."

The regulator estimates that across Australia's superannuation industry, based on mid-2022 figures, there are approximately three million people with multiple accounts and a "significant proportion" of these are held within the same fund.

ASIC notes that data provided by the Australian Tax Office (ATO) shows that as of May 2023, more than half a million superannuation members had two or more accounts within the same fund.

It has been a litigious week for ASIC, suing Westpac (ASX: WBC) for allegedly failing to act ‘efficiently, honestly and fairly’ in responding to hardship notices from its customers, and taking PayPal Australia to court for allegedly unfair contract terms with small businesses by only giving them 60 days to notify the company of any errors or discrepancies in fees charged.

"We allege this term is unfair because it allows PayPal to escape the consequences of its own errors in overcharging small businesses, and places additional burdens on small businesses to detect and correct charging errors," ASIC deputy chair Sarah Court said yesterday.

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