AustralianSuper Fined $17 Million for Neglecting to Merge Duplicate Accounts

Corporate watchdog highlights the need for better member protection / Reuters

AustralianSuper, recognized as Australia's largest superannuation fund, has been penalized with a hefty fine of AUD 27 million (approximately USD 17.3 million) by the Australian Securities and Investments Commission (ASIC) for its failure to merge duplicate member accounts. Over the span from July 2013 to March 2023, around 90,700 members suffered a cumulative financial impact of AUD 69 million due to the imposition of multiple administration fees and insurance premiums associated with their duplicate accounts.

The ASIC found that AustralianSuper lacked the necessary procedures to identify and consolidate these duplicate member accounts effectively. The regulator's scrutiny revealed significant systemic issues within the fund, prompting criticism from the Federal Court regarding AustralianSuper's inadequate processes. This ruling underscored the pressing need for improved compliance measures and enhanced member protection within the superannuation industry.

In response to the discovery of these issues, AustralianSuper took immediate action by reporting the error to ASIC, issuing apologies to the affected members, and implementing compensatory measures. The fund has since made improvements to its internal processes to ensure that similar oversights do not occur in the future. AustralianSuper's Chief Executive, Paul Schroder, emphasized their commitment to rectifying the situation, stating, "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."

To address the financial repercussions of the fine, AustralianSuper accounted for the anticipated penalty in its financial statements for the 2023-2024 fiscal year. Importantly, the fund clarified that it has not increased member administration fees to cover the penalty costs, reflecting its dedication to maintaining financial stability for its members.

This incident is not isolated; AustralianSuper had previously reported a potential failure to meet ASIC's obligations regarding the consolidation of duplicate accounts back in December 2021. In September 2023, ASIC responded by initiating legal proceedings against the pension fund, culminating in the recent ruling. This case serves as a critical reminder of the importance of robust compliance mechanisms in safeguarding the interests of members within Australia's superannuation landscape.