The recent findings that AustralianSuper illegally collected $69 million in fees from its members between 2013 and 2022 by not merging duplicate accounts have sparked a debate about ASIC’s enforcement of regulations across superannuation funds.
Despite the Federal Court ruling that AustralianSuper must pay penalties, including a $27 million fine (to be paid from a member reserve fund), the perceived discrepancies in penalties between industry super funds and retail funds have triggered concerns among retail super fund providers. George and Hartley, heads of major retail funds, argue that ASIC is holding different funds to different standards. They emphasize that all super funds should be treated equally under the same laws, regardless of their ownership structure, whether for-profit (retail funds) or not-for-profit (industry funds).
Key Points of the Issue:
AustralianSuper, an industry super fund, was found to have overcharged 90,700 members due to duplicate accounts and was fined $27 million.
Retail funds, such as those managed by Insignia and AMP, argue that penalty standards should be consistent across all super funds. They argue that ASIC’s softer stance on industry funds undermines the deterrence effect of fines.
Blake Briggs, CEO of the Financial Services Council, which represents retail funds, claims that misconduct in either sector should be treated equally, and penalties should reflect the harm caused to consumers.
ASIC’s deputy chairwoman Sarah Court stated that the regulator considers each case individually, with penalties based on who retained the benefit of the misconduct. However, critics argue this approach favors industry funds, where penalties are often paid through member reserves rather than by trustees.
Broader Concerns:
Governance and service standards in industry super funds are under growing scrutiny. For example, Cbus is being sued by ASIC for failing to process death benefit claims.
Critics, like Senator Andrew Bragg, argue that unions and trustee shareholders should be more directly responsible for penalties, and not pass on the costs to fund members.
In response, ASIC maintains that it treats both industry and retail funds equally, but the ongoing controversy highlights significant concerns over fairness and accountability in the superannuation industry.
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