AustralianSuper Faces AU$27 Million Penalty For Overcharging Members Due To Duplicate Accounts

Australia's largest superannuation fund, AustralianSuper, was fined AU$27 million by the federal court on Friday for overcharging thousands of members a total of AU$69 million.

The fund failed to merge duplicate accounts, which led to financial losses for members over almost 10 years.

AustralianSuper manages over 3.5 million members and is responsible for 14.6% of all superannuation accounts in the country.

Misconduct and systemic failures

Justice Lisa Hespe, who ruled against AustralianSuper, said that the penalty reflected the seriousness of the fund's misconduct as it failed to act in the best financial interests of its members and broke their trust, 9News reported.

She noted that the situation worsened due to a systemic failure to address and fix the issue after it was identified. AustralianSuper reported the problem to the Australian Securities and Investment Commission (ASIC) in December 2021.

In her ruling, Justice Hespe said it was unacceptable for AustralianSuper to lack proper processes to ensure compliance with legal requirements. She highlighted that the company's systems failed to prevent or promptly correct repeated human errors in merging duplicate accounts.

Internal communications from AustralianSuper suggested that some employees prioritized retaining as many accounts as possible instead of acting in the best interests of individual members.

Justice Hespe noted that this showed a lack of understanding of the company's duties and the seriousness of its actions.

However,Hespe mentioned that the fund cooperated during the investigation and court process. Both ASIC and AustralianSuper suggested that a AU$27 million fine would be a fair penalty, and Hespe agreed with their recommendation.

"The penalties in this case need to be large enough to deter other superannuation fund trustees from failing to diligently discharge their duties to act in members' best financial interests," Justice Hespe said. "I am satisfied that AustralianSuper is unlikely to engage in this contravention again given the remedial action it has taken and its acceptance of its wrongdoing."

AustralianSuper CEO Apologizes

AustralianSuper's chief executive Paul Schroder apologized for the mistake, saying that the company had identified the issue and compensated the affected members.

He acknowledged that multiple accounts were a common issue in the industry and admitted that AustralianSuper's process was not previously thorough enough to fully meet its responsibilities to members.

Schroder assured that the issue has now been fixed and that the company continued to review and improve its services to better support its members.