Following a review that identified poor superannuation trustee practices, the Australian Securities and Investments Commission (ASIC) has told super trustees to increase duplicate account consolidation efforts.
The review of nine trustees across both industry and retail funds, assessed how the trustees are meeting their obligation to annually identify and automatically consolidate duplicate member accounts within a superannuation fund to minimise payment of unnecessary fees.
As of 30 June 2022, the Australian Taxation Office (ATO) said there were about 3 million people holding two or more superannuation accounts, including some members holding duplicate accounts within the same fund.
ASIC commissioner Danielle Press said: “Duplicate accounts may result in super fund members unintentionally paying multiple sets of fees, including insurance premiums, which can significantly erode their superannuation balance over time.
“Trustees should be proactively merging duplicate member accounts within the fund to not only help their members avoid extra fees but also to ensure their funds avoid costly remediation in the future. However, our review highlighted that they are not doing enough.”
Among the concerns raised by the review was that three of the nine trustees did not have documented procedures for identifying and consolidating duplicate accounts on an annual basis. Some trustees also had rules that excluded some segments of members, despite the process needing to apply to all fund members.
ASIC said all nine trustees now either have, or will have, documented processes that apply to all members. It added that five trustees are undertaking the matching process on a monthly basis, or moving to do so, with three more undertaking it at least quarterly.
Only one trustee failed to make some form of best interest assessment on members holding multiple accounts, while most trustees contacted their members about duplicate accounts, despite no legal obligation to do so.
“It is good practice to contact members when duplicate accounts are identified and to remind them about duplicates on a regular basis because a member’s situation or capacity to address the issue is likely to change over time,” ASIC said.
The corporate regulator added that two trustees with multiple funds did not have an internal policy on consolidation of duplicate accounts, instead relying on the administrator to have a process in place.
ASIC’s review also found that, while it is not expressly required by law, three trustees had a process to check for existing accounts on account creation.
Ms Press said that while encouraging trustees committing to improvements was encouraging, the failures identified were troubling.
“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,” she said.
“We expect all trustees to closely review their policies and procedures against the issues identified and take immediate steps to close the gaps. We will continue to monitor how trustees are consolidating duplicate accounts. Where we identify serious failures impacting consumers, we will take enforcement action where appropriate.”
