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Consolidating Super

Thursday 14 September 2023



Australian Super has fallen afoul of the conduct regulator for not identifying members with multiple accounts for 10 years.

The Australian Securities and Investments Commission (ASIC) alleges that the superfund did not have adequate policies and procedures to identify members who help multiple accounts, leading to the members being charged multiple sets of fees between 2013 and 2023.

This comes almost three months after the conduct regulator warned Superannuation trustees that they needed to 'effectively consolidate duplicate member accounts.'

ASIC Deputy Chair Sarah Court said in an official statement about Australian Super, "Failing to merge duplicate accounts within a fund can have significant financial consequences for members who end up paying multiple sets of fees, eroding their superannuation balance over time."

These allegations are a breach of 108A of the Superannuation Industry(Supervision) (SIS) Act:
  • There is a requirement to have a procedure around identifying members with multiple accounts. This procedure must be followed once every year.
  • If multiple accounts for a member are found, they should be merged, and
  • There shouldn't be fees for the above process.
In their official statement, the regulator highlighted a list of requirements they alleged that Australian Super failed to follow.
 
Highlighted expectations as published on the ASIC website:
  • Set out a procedure to identify and merge multiple accounts of members in accordance with section 108A of the SIS ACT,
  • Efficiently identify, escalate and rectify the ongoing failure to comply with that section and remediate affected members,
  • Promptly identify and merge multiple accounts in accordance with the required procedures,
  • Do all things necessary to ensure its financial services were provided efficiently, honestly and fairly,
  • Exercise the same degree of care, skill and diligence as a prudent superannuation trustee would have exercised, and
  • Perform its duties and exercise its powers as a superannuation trustee in the best interests of its members.
 
Australian Super said in an official response that they regret their processes and procedures did not capture all occurrences of multiple accounts.

"Having identified this issue, we have strengthened our processes to identify and combine multiple accounts and remain committed to minimising these for members".

The superfund said they are self-reported and have been cooperating with ASIC and the Australian Prudential Regulation Authority (APRA), including the 2022 review for managing multiple accounts.

They add that remediation for affected members is almost complete.
 
 
ASIC Review on Multiple Accounts
The warning ASIC gave the wider superannuation community based on a review they conducted last year.

In June 2022, three million people were identified by the Australian Tax Office (ATO) as having multiple accounts, some of which included those holding multiple accounts at the same fund.
The review found some positive developments and, in some cases, where trustees had gone beyond legal requirements to check for multiple accounts and to consult with members who might have multiple accounts.

But there were also some clear challenges.

The conduct regulator found that three out of nine trustees needed to have documented business rules on how they would comply with 108A.

ASIC continued, "While this process should apply to all fund members, some trustees had rules that excluded certain cohorts of members."

Two of the trustees with multiple funds needed an internal policy on consolidating the multiple accounts for members.

In an official response to the review, ASIC Commissioner Court said, "It shouldn't take an ASIC review for super trustees to comply with the law. We are concerned about some of the failures uncovered in our review and are considering other regulatory action for more serious concerns"
.
This is not the first review for 2023 calling on funds and trustees to lift their performance.

A review in the first half of this financial year identified that trustees took a reactive approach to communicating performance test failure.

A joint thematic review conducted by ASIC and APRA found that trustees needed more to improve their retirement outcomes planning.

The ASIC Deputy said in a formal statement, "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. We expect these issues to be identified and rectified quickly, including compensating members if a trustee has failed to comply with its obligations".
 

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