The corporate regulator has filed civil penalty proceedings against Statewide Superannuation, alleging it engaged in “misleading or deceptive correspondence” when 12,500 members were contacted about group insurance they supposedly held through the financial services provider.

Annual statements and warning letters were sent to these members of Statewide Superannuation Trust, stating they had insurance cover when they did not, the Australian Securities and Investments Commission (ASIC) said in a statement last week. Statewide is the trustee of the fund.

Statewide subsequently deducted monthly insurance premiums totalling $1.5 million from the super accounts of affected fund members for non-existent covers.

The actions allegedly took place between May 2017 and June last year.

“ASIC alleges that in making these representations, Statewide breached its obligations as an Australian financial services licence holder to act efficiently, honestly and fairly and to comply with the financial services laws,” the corporate regulator said.

“ASIC also alleges Statewide failed in its breach reporting obligation to report these breaches to ASIC within 10 business days.”

The corporate regulator is seeking declarations, pecuniary penalties and injunctions relating to a remediation program and publication orders in the Federal Court. The court has not yet set a date for the first case management hearing.

A spokesman for Statewide told insuranceNEWS.com.au the fund will not be making additional comments beyond the statement it has already issued in response to the court proceedings taken by ASIC.

In the statement, Statewide says the proceedings relate to a self-reported insurance administration error that occurred during a specific period of time and relates to a specific cohort of members.

“Statewide Super will communicate with and then remediate any affected current and former members as soon as possible and all entitlements will be honoured,” the statement said.

“Once Statewide Super discovered the nature of the insurance administration error, the organisation self-reported to ASIC, while conducting a forensic examination and developing a remediation plan.

“Statewide Super has actively sought to cooperate with ASIC at all times.”