Australia’s largest pension fund, AustralianSuper, has been hit with a A$27 million ($17.3 million) fine after a court found it had failed to properly identify and merge duplicate member accounts over a 10-year period. The ruling was made following an investigation by the Australian Securities and Investments Commission (ASIC), which concluded that the pension fund did not have adequate procedures in place to manage duplicate accounts.
AustralianSuper, which manages A$365 billion in assets and serves over 3.5 million members, was found to have failed to consolidate the duplicate accounts of approximately 90,700 members between July 2013 and March 2023. This oversight led to the affected members incurring unnecessary costs, including multiple sets of administration fees and insurance premiums, amounting to an estimated A$69 million in losses.
ASIC’s findings revealed that AustralianSuper did not have effective systems in place to detect and merge the duplicate accounts, which is a requirement under Australian law. As a result, members were charged more than necessary for the same services. The pension fund’s failure to address this issue promptly has sparked concerns over its internal processes and the impact on its members’ financial well-being.
In response to the fine, AustralianSuper’s Chief Executive, Paul Schroder, expressed regret, stating that the issue was identified and reported to the regulator as soon as it was discovered. The company has since compensated the affected members and implemented improved procedures to prevent similar issues from arising in the future.
The A$27 million penalty is part of a provision AustralianSuper had already set aside in its 2023-2024 financial year accounts, and the company clarified that member administration fees had not been raised to cover the cost of the fine.
This legal issue follows a series of warnings, including a 2021 report from AustralianSuper about potential non-compliance with ASIC’s requirements to consolidate duplicate accounts. In September 2023, ASIC took legal action against the pension fund, culminating in the court ruling on the penalty.
The case highlights the growing scrutiny on Australia’s financial institutions and the importance of proper account management systems to protect members’ funds and ensure compliance with regulatory obligations.
