Industry superannuation fund HESTA is under scrutiny after revealing significant expenditures on association memberships and marketing, totaling nearly $4 million in 2024. The fund has declined to disclose legal advice regarding whether these expenses meet the Best Financial Interests Duty (BFID), citing client legal privilege in its response to a Senate Committee inquiry.
In a submission to the Senate Economics References Committee, HESTA outlined more than $3.9 million in expenses, with over $3.1 million allocated to industry groups such as Super Members Council (SMC) and Industry Super Australia. Senator Andrew Bragg, a member of the NSW Liberal Party, questioned the fund about the legal advice it has received on whether these payments align with the BFID standards, which require super funds to act in the best interests of their clients.
However, HESTA maintained that the legal advice it received is protected by client legal privilege, and it should not be expected to waive that privilege. The fund further emphasized that some of the advice may also be subject to confidentiality restrictions imposed by third parties, preventing them from providing additional details.
This response follows concerns from the Senate Committee after the fund’s initial reply was deemed insufficient. Senator Bragg had criticized HESTA for directing questions to websites or providing vague responses, rather than directly answering the queries. In a formal letter to HESTA in early February 2025, Bragg requested a more comprehensive response to the questions posed by the committee, particularly asking the fund to explain why certain answers were withheld under client legal privilege.
“The committee requests that you address the questions put, which have been listed in the attachment to this letter,” Bragg wrote. He also sought clarification on HESTA’s request to keep some of the answers confidential, asking for further justification on why the release of this information could potentially cause harm.
HESTA was given until COB Wednesday, 19 February 2025 to provide further responses.
In related inquiries, Cbus, another super fund, also faced similar questions from Bragg regarding its spending on advertising. In response, Cbus referred Bragg to its public website disclosures, which detailed its significant expenditure on marketing and advertising. These included $2.2 million spent with Google Australia, $3.3 million with Industry Super Australia, $8.1 million with Initiative Media, $4.8 million with Louder Digital, and $1.2 million with The Shannon Company.
The ongoing inquiries highlight increasing scrutiny of the financial practices of industry super funds, with particular focus on how funds allocate member assets toward marketing, membership, and advertising activities.
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