Regulator slams super giant Hesta for causing ‘direct harm’ to members
Super fund giant Hesta has been hit with additional licence conditions after forcing a seven-week blackout that caused ‘direct harm’ to more than 1 million healthcare workers.
Industry super giant Hesta caused direct harm to members when it forced a seven-week blackout on its services while it switched administrative providers earlier this year, according to the prudential regulator.
The Australian Prudential Regulation Authority on Thursday imposed additional licence conditions on the super fund over risk and governance failures in managing the administration changeover, which took place between April and June.
But six months later, members are still having issues accessing some of their information, including past contributions. Financial advisers told The Australian there was currently no visibility over any member contributions made prior to July 2022.
“It’s terrible. It’s really basic information but it’s important, especially when you need to look at carry forward contributions from the previous five financial years,” one adviser, who spoke on the condition of anonymity, told The Australian.
Currently, the only way members and advisers can access this information is to email the fund and wait for a response, which typically takes 48 hours. “It’s not good enough. This is information that, as advisers, we should have at our fingertips,” the provider said.
Hesta was contacted for comment.
The fund manages about $100bn in assets for more than 1 million of the nation’s healthcare industry workers.
Deficiencies in risk and governance meant the fund was ill-prepared to manage the April to June admin transition, APRA said. Earlier this year, the fund announced it would switch service providers, from the scandal-plagued MUFG Pension & Market Services (formerly Link) to upstart Grow Inc.
MUFG was at the centre of the admin service failures that rocked the super industry in 2024, including substantial delays in paying out death and disability claims.
In making the change, Hesta forced a blackout of almost two months on members, during which it did not process member contributions, investment switch requests or death or disability claims. Members were informed of the disruption in February.
According to the regulator, the admin transition resulted in “a severe, prolonged disruption to member services and caused direct harm to members”. APRA deputy chair Margaret Cole said: “APRA expects trustees to demonstrate strong governance and risk management in their oversight of critical operations and material service providers.
“That responsibility is further heightened when a service that is critical to members is at risk.
“While some disruption is unavoidable when changing service providers, APRA expects that any transitions are well managed and do not result in any unnecessary impact on members’ ability to access their accounts.
“APRA’s imposition of licence conditions mean that Hesta is required to take prompt action to address deficiencies. APRA will utilise its powers to hold trustees accountable to meet their obligations to members.”
In response, Hesta chief executive Debby Blakey apologised to affected members. “We take the matters raised by APRA very seriously and are co-operating fully with the regulator to resolve them. We apologise to members who experienced delays during our transition to a new administration provider,” Ms Blakey said.
“The change to a new administration platform in June was made with a long-term focus on delivering better, more personalised service to our members.
“Since the transition we have worked closely with our administration provider to seek to deliver the level of service our members expect and deserve. We are committed to implementing any potential improvements identified so we can better support our members now and into the future,” she said.
In June, The Australian revealed how even after restoring services, Hesta and its new administrator were overwhelmed, with members experiencing hours-long call waiting times as well as delays in basic administrative services, including processing payments.
The fund reopening was so disorganised that, in some instances, call centre staff were unable to identify accounts when speaking to members.
Other members reported issues with income stream accounts, while there were also complaints that urgent payment requests submitted during the lockdown period were excessively delayed.
Under the additional licence conditions, Hesta is required to conduct separate independent reviews of its risk management framework and board effectiveness.
Originally published as Regulator slams super giant Hesta for causing ‘direct harm’ to members
