AustralianSuper, the country’s largest industry superannuation fund, has been fined $27 million by the Federal Court for failing to merge duplicate accounts, resulting in losses for tens of thousands of members.
Justice Lisa Hespe handed down the ruling on Friday, finding that AustralianSuper had contravened the Superannuation Industry Act by not identifying and consolidating multiple accounts between July 2013 and June 2022. More than 90,000 members were affected, collectively losing approximately $69 million through unnecessary administration fees, insurance premiums, and lost investment earnings.
“It is inexcusable for [AustralianSuper] to not have had processes and systems in place to ensure compliance with a specific legislative requirement,” Justice Hespe stated in her judgment.
The Australian Securities and Investments Commission (ASIC) initiated legal action against AustralianSuper in 2023 after the fund self-reported the issue in December 2021. Despite cooperating with ASIC’s investigation, AustralianSuper was criticised for taking three years to notify regulators after becoming aware of the problem.
ASIC and AustralianSuper jointly proposed the $27 million penalty, which Justice Hespe approved, stating that the fine needed to be “large enough to deter other superannuation fund trustees from failing to diligently discharge their duties to act in members’ best financial interests.”
AustralianSuper has since compensated affected members and taken steps to prevent similar issues in the future. Chief Executive Paul Schroder acknowledged the fund’s failure, describing multiple accounts as an industry-wide problem.
“For several years, our process wasn’t comprehensive enough to meet our obligations to members,” Schroder said in a statement. “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.”
As part of the court ruling, AustralianSuper has been ordered to display a prominent notice about the decision on its website and within its member portal. The court-specified alert must appear on the first screen members see when logging in.
AustralianSuper, which manages more than $341 billion in retirement savings for 3.5 million members, said it had budgeted for the penalty and would not be increasing fees to cover the fine.
The full court decision is expected to be published online.
