Retirement
ASIC launches civil penalty proceedings against industry fund REST
ASIC has commenced civil penalty proceedings against industry fund REST for preventing members from transferring some or all of their funds to another super fund, ultimately resulting in their financial loss.
ASIC launches civil penalty proceedings against industry fund REST
ASIC has commenced civil penalty proceedings against industry fund REST for preventing members from transferring some or all of their funds to another super fund, ultimately resulting in their financial loss.
ASIC is taking Retail Employees Superannuation (REST) to the Federal Court for “false or misleading representations” made about the ability of its members to transfer their superannuation out of the fund.
“ASIC alleges that, from at least 2 March 2015 to 2 May 2018, REST made representations that discouraged, and in many cases delayed or prevented, members from transferring some or all of their funds to another superannuation fund,” the watchdog confirmed in a statement.
According to ASIC, these members were denied their lawful rights to superannuation portability and choice of superannuation fund, causing them to suffer financial loss.
ASIC further alleged that this conduct resulted in REST retaining a higher level of funds under management than would otherwise have occurred.
Specifically, ASIC found that REST made representations, both orally and in writing, to members who made, or were considering making, full balance transfers to another fund that:
- if they remained employed by an employer who made contributions to the fund (REST employer) and that employer continued to make contributions to REST, they were required to keep a minimum balance of $5,000 in their account with the fund;
- if they remained employed by their REST employer but their employer was willing to contribute to another fund, members needed an employer declaration stating either the date the employer stopped making contributions to the fund or confirming the member’s ‘choice of fund rights’ in order to leave the fund;
- if they were no longer employed by their REST employer, members needed to obtain a separation certificate or confirmation of their termination date from their employer and provide this to REST before they were able to transfer the full balance of their REST account to another super account.
According to the watchdog, these representations were “false, misleading or deceptive”, or likely to mislead or deceive because, under the Superannuation Industry (Supervision) Act 1993, REST was not permitted to impose these conditions on transfers out of the fund.
Responding to ASIC’s announcement, REST said in a statement it has the “best financial interests of members” at its core.
According to the fund, the proceedings relate to the disclosure of an internal business process that was removed in May 2018, which required some members to provide an employment termination date or separation certificate to process a rollover of superannuation.
“REST is currently contacting and remediating members who may have experienced a delay in the transfer of their super as a result of the application of this business process between 1 January 2014 and 2 May 2018.”
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