ESSSuper sues Iress over alleged breaches

Super fund says it had ‘no alternative’ but to push ahead with legal proceedings.

ESSSuper is suing admin provider Iress for alleged breaches of contract.

ESSSuper is suing financial services software provider Iress for alleged breaches of contract and misrepresentations the fund says have impacted members.

The $37bn super fund for Victorian government and emergency services agencies commenced civil proceedings in the Federal Court against Iress and its wholly owned subsidiary Financial Synergy Holdings on Thursday, with Iress informing the market early on Monday.

Iress shares ended the trading session little changed at $9.95 a share after earlier rising 0.4 per cent.

ESSSuper chair Joan Fitzpatrick said there had been “numerous incidents and breaches by Iress” since the fund had outsourced its admin services to the technology company.

“Iress was contracted to provide technology systems to assist the ESSSuper to administer the fund. Since entering into the contract, there have been numerous incidents and breaches by Iress which ESSSuper has sought to have rectified through direct engagement and through using the dispute mechanism clauses in the contract,” Ms Fitzpatrick said.

“ESSSuper members have been significantly inconvenienced. ESSSuper has suffered loss and damage as it has been forced to spend time and money, and engage third parties, to rectify the incidents and breaches caused by Iress,” she added.

The super fund moved to digitise its back office operations in 2019, inking a multimillion-dollar partnership with Iress.

ESSSuper and its 132,000 members were the first signed up to Iress’ “automated super admin” service that was to reduce reliance on manual processes, along with the associated compliance and business

risks, and leverage Iress’s technology platform.

At the time, Iress said its platform would deliver savings and sustainable efficiencies, allowing funds to invest in higher-value

services for members.

ESSSuper then handed further admin control over to Iress in early 2022.

That same financial year, Iress reported incorrect contribution amounts for ESSSuper to the Australian Taxation Office, resulting in 9 per cent of ESSSuper defined benefit members being issued with excess concessional contributions notices.

“As a member-focused fund, ESSSuper does not enter into litigation lightly,” Ms Fitzpatrick said on Monday.

“However, given the ongoing lack of resolution in response to our clearly articulated concerns, and the significant inconvenience to members and the fund, the board has no alternative but to issue these proceedings.

“The ESSSuper Board has a legislative duty to protect the rights and interests of our members,” Ms Fitzpatrick said.

Iress acknowledged the proceedings but denied the claims, saying it would file a defence with the court.

Iress continues to provide the contracted services to ESSSuper.

Revenue in Iress’ super division fell 7 per cent in the six months to June 30, following the exit of a number of clients, the company said in an August update.

Iress shares are up 23 per cent calendar year to date.