AustralianSuper has been fined $27 million for breaching laws that protect members with more than one account in a superannuation fund.

The misconduct affected more than 90,000 members, who incurred about $69 million in losses through multiple administration fees, insurance premiums and lost investment earnings, the Federal Court’s Justice Lisa Hespe ruled.

Senior managers were made aware of potential compliance issues from at least 2018, and an incident report was made but not acted on.

“AustralianSuper is Australia’s largest industry superannuation fund,” Justice Hespe said in her ruling on Friday. “It is inexcusable for it to not have had processes and systems in place to ensure compliance with a specific legislative requirement … imposed expressly and directly on trustees of superannuation funds.

“Its systems also failed to ensure that repeated human errors in relation to the failure to merge the multiple accounts were prevented or promptly identified and corrected.”

Section 108A of the of the Superannuation Industry (Supervision) Act 1993 requires fund trustees to identify members with multiple accounts and merge them if it is in their best interest. Checks must be carried out at least once each financial year.

Justice Hespe said: “The failures should not have happened. The failures are serious and highly concerning.”

Australian Securities and Investments Commission deputy chair Sarah Court says the $27 million penalty reflects the severity of the misconduct.

“This was exacerbated by a systemic failure to escalate and remediate the issue once it was identified,” she said. “Improving services to superannuation fund members is a strategic priority for ASIC and we will continue to take strong action where we consider that members are not getting the service they deserve from their superannuation trustees.”

ASIC lodged court proceedings against AustralianSuper in September 2023, alleging the breaches occurred between July 1 2013 and March 31 2023.

AustralianSuper has fully remediated affected members. The fund said it reported its mistake to ASIC and the Australian Prudential Regulation Authority in December 2021.

“We found this mistake, we reported it, we apologised to impacted members, we compensated them, and we’ve improved our processes to prevent this happening again,” CEO Paul Schroder told insuranceNEWS.com.au. 

“Multiple member accounts are a problem across our industry and for several years our process wasn’t comprehensive enough to meet our obligations to members.

“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.”

ASIC says tax office data shows about 4 million people had two or more super accounts as of June 30 last year.

See the judgment here.