The corporate regulator has launched civil penalty proceedings against AustralianSuper over its alleged failures to “promptly identify and merge” multiple accounts held by the same members, causing them to pay more insurance premiums and administration fees than necessary. 

Australian Securities and Investments Commission (ASIC) Deputy Chair Sarah Court says 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. 

“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,” Ms Court said. 

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

ASIC alleges that for almost 10 years AustralianSuper failed to have adequate policies and procedures to identify members who held multiple accounts and to merge those accounts, where merging was in the member’s best interests. 

The alleged failures between July 1 2013 and March 31 this year affected about 90,000 AustralianSuper members, costing them around $69 million. 

“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,” the regulator said. 

In a concise statement filed in the Federal Court, ASIC says AustralianSuper’s conduct resulted in a large number of members being exposed to “avoidable” financial losses. 

“The proliferation of unintended multiple superannuation accounts is a longstanding problem in the superannuation sector which has resulted in the erosion of members’ superannuation balances through the payment of multiple administration fees, insurance premiums and the lost opportunity to earn investment returns on those amounts,” the concise statement says. 

AustralianSuper has responded to the ASIC action. A spokesperson says the fund “regrets that its processes to identify and combine multiple accounts did not cover all instances of multiple member accounts”. 

“This should not have happened, and we apologise unreservedly to members,” the spokesperson said in a statement. 

The spokesperson says the fund self-reported the matter and has “fully cooperated” with ASIC and the Australian Prudential Regulation Authority (APRA). 

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

Section 108A of the Superannuation Industry (Supervision) Act 1993, which came into effect on July 1 2013, requires a fund trustee establish rules that set out a procedure for identifying when a member has multiple accounts. 

It also requires the trustee to carry out that procedure at least annually and the trustee is obligated to merge multiple accounts if it reasonably believes that it is in the member’s best interests to do so. 

ASIC says unintended multiple accounts remains a significant issue for Australian consumers. As at June 30 last year about three million people had multiple superannuation accounts. 

Click here for the concise statement.