AustralianSuper overcharges 100,000 customers $70m in double fees

Australia’s largest super fund comes clean about double charging thousands of members for up to 10 years without knowing it.

AustralianSuper will return the extra fees it charged for administration and insurance costs, along with lost earnings on the amounts.

Australia’s largest superannuation fund, AustralianSuper, has overcharged 100,000 members a combined $70m in double fees related to members having multiple accounts.

The mega industry fund said it has told the regulator about the double charges, which date back as far as 10 years.

It said usual efforts to identify and combine multiple accounts held by a single member had fallen short and had missed the mark.

“This should not have happened, and we apologise unreservedly to members,” the fund said in a statement.

A comprehensive review had finally identified thousands of members had multiple accounts and were being charged fees for each account they held.

It self-reported the problem to the regulator last year and on Friday it began contacting customers impacted, who will receive remediation payments.

The revelation comes after a financial services inquiry in 2018 revealed rampant fee gouging at corporate pension funds but largely spared industry super funds.

“It is alarming that such a major fund is coming out with this now,” Super Consumer Australia director Rosie Thomas said.

“We are calling on all funds to review their processes and follow the AustralianSuper example by reporting the outcomes to ASIC and APRA. And where funds are not complying, we want the regulators to take strong transparent action.”

The Australian Prudential Regulation Authority declined to comment, saying Australian Securities and Investments Commission was the lead regulator for the matter. ASIC said they were “engaging” with AustralianSuper “in relation to the issues identified in its review”.

Laws introduced in 2013 require super funds to annually identify people with multiple accounts and merge them if appropriate.

From 2021, regulations also mandate the “stapling” of workers to a single fund to prevent people from unintentionally having multiple super accounts charging multiple fees.

The regulator said it started “engaging” with trustees in early 2022 after a review of the policies and processes of superannuation funds found “a high proportion of members with multiple superannuation accounts despite their legal duty to identify multiple accounts held by members.

“ASIC has engaged closely with APRA on this review and intends to release public communication in the coming months which covers our overall observations on compliance with section 108A by superannuation trustees,” a spokesman for the regulator said in a statement.

AustralianSuper will return the extra fees it charged for administration and insurance costs along with lost earnings on the amounts. Remediation payments will average about $650 per member.

“AustralianSuper’s aim is to return these members to the financial position they would be in now if this hadn’t occurred,” it said.

“We have strengthened our processes around managing multiple accounts for all members to help ensure instances where a member has more than one account are identified, and appropriate actions are taken in a timely way.”

Being charged extra fees can have a significant effect in the final earnings of members at retirement, often adding up to tenths of thousands of dollars, said Super Consumer’s Ms Thomas. The Productivity Commission that having unnecessary multiple accounts can leave workers over $50,000 worse off in retirement.

“A person often ends up with multiple accounts in the same fund if they’ve had a series of jobs in the same industry and were signed up for the same default fund more than once.” she said.

“Paying extra fees and insurance premiums for more than one account really adds up.”