On Tuesday, it was confirmed that the penalty was handed to Statewide Superannuation for “providing members with misleading information regarding their insurance and failing to breach report the issue to ASIC in the time required by law”.
Between 2017 and 2020, Statewide was found to have sent over 14,000 annual statements or other correspondence to at least 7,000 members representing that they held insurance within their superannuation where their insurance cover had lapsed.
Statewide was found to have overcharged insurance premiums of at least $2.5 million to some members and failed to report these issues within 10 days of becoming aware of them.
On 22 December 2021, the Court imposed a $3.5 million penalty for the misleading correspondence and $500,000 for failing to report the breach to ASIC.
“Statewide provided misleading communication to thousands of its members, telling them they had insurance cover when they did not. It also overcharged more than $2.5 million in insurance premiums to members who no longer held insurance as part of their superannuation accounts. This led to the risk that fund members may have found themselves without insurance when they needed it,” ASIC deputy chair Sarah Court said.
“When it discovered these issues, Statewide failed to report them to ASIC in a timely manner. Breach reporting is integral to board oversight and risk management by licensees.
“Financial services companies have strict obligations to report contraventions of the law to ASIC, including time limits in which to do so.”
When explaining the reasons for the penalty decision on Monday (17 January) Justice Anthony Besanko said that while Statewide’s conduct was not deliberate it highlighted “inadequate management and risk control processes”.
The remediation for the affected fund members is ongoing.
READ MORE: Industry fund responds to Federal Court penalty.
Neil Griffiths
Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.
Neil is also the host of the ifa show podcast.
