AustralianSuper fined $27m for charging duplicate fees to customers

Australia’s biggest superannuation fund has been fined $27m for charging duplicate fees to tens of thousands of customers.

Australia’s largest super fund has been fined $27m for charging duplicate fees to tens of thousands of customers.

The Australian Securities and Investments Commission (ASIC) sued AustralianSuper in 2023.

It was found more than 48,000 members’ accounts were not merged in their best interests, allowing duplicate fees to eat up retirement savings.

ASIC and AustralianSuper appeared in the Federal Court at Melbourne on Friday, where Justice Lisa Hespe handed down her decision, fining AustralianSuper $27m and ordering the fund pay ASIC’s legal costs up to $500,000.

In a statement after the hearing, AustralianSuper chief executive Paul Schroder said they had taken steps to prevent this happening again.

AustralianSuper chief executive Paul Schroder says the system which allowed the mistake has been fixed. Picture: Supplied

“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,” he said.

The fund had not raised fees to pay the fine, rather the fund had set aside money in the budget to pay the penalty, Mr Schroder said.

ASIC took AustralianSuper to court, alleging 90,000 AustralianSuper members were affected from 2013 to 2023, with about $69m of super funds being subsumed by duplicate fees.

The negligence equates to about $650 per customer.

AustralianSuper self-reported the issue and agreed to pay back affected customers before the case made it to court. But the regulator pushed ahead with legal action, saying a three-year delay between becoming aware of the issue and flagging it was not up to scratch.

The breaches of the Superannuation Industry Act and Corporations Act that AustralianSuper committed span from 2019 to 2023, and relate to the company’s failure to rectify the issue.

The Australian Securities and Investments Commission has sued AustralianSuper, with the courts ordering a $27m fine. Picture: NewsWire / Gaye Gerard

In a brief court hearing on Friday, Justice Hespe ordered AustralianSuper to display an unavoidable message about the court decision on its website, and on the first screen members see when they log in. The order specifies the font, size, colour and position of the alert.

Neither side’s lawyers made oral submissions to the court on Friday.

In a statement, the fund boss says the error was self-reported, affected members were compensated, and systems have been improved to stop it happening again.

“Multiple member accounts are a problem across our industry and for several years our process wasn’t comprehensive enough to meet our obligations to members. We’ve fixed that now and we continue to review and improve our services, so we provide members with the support and guidance they expect and deserve,” Mr Schroder said.

The expected court-ordered penalty was covered in forward budgeting, and fee had not be raised to cover the fine, he said.

AustralianSuper’s negligence cost tens of thousands of customers about $650 each. Picture: NewsWire / Nicholas Eagar

AustralianSuper added $26.7bn to retirement savings of Australian’s last year.

“ASIC expects that superannuation funds will put their members first and promptly address issues that cause members to face multiple sets of fees and insurance premiums,” ASIC deputy chair Sarah Court said when the case was filed.

“We expect these issues to be identified and rectified quickly, including compensating members if a trustee has failed to comply with its obligations.”

In a statement made when the case was filed, AustralianSuper admitted fault.

“AustralianSuper regrets that its processes to identify and combine multiple accounts did not cover all instances of multiple member accounts,” a spokesperson said in September 2023.

“This should not have happened, and we apologise unreservedly to members.

“AustralianSuper self-reported this issue and has fully cooperated with ASIC and APRA on this matter and, separately, with ASIC for its 2022 industry review of the management of multiple member accounts.

“AustralianSuper implemented a member remediation program for this matter.”

About one in every eight Australian workers has money being managed by AustralianSuper; the company oversees retirement savings to the tune of $341bn.

The Federal Court will publish the full decision online later on Friday.

Originally published as AustralianSuper fined $27m for charging duplicate fees to customers