Retirement
Second super fund sued by ASIC
Statewide Super has become the second fund in a number of days to be taken to court by ASIC over misleading or deceptive behaviour.
Second super fund sued by ASIC
Statewide Super has become the second fund in a number of days to be taken to court by ASIC over misleading or deceptive behaviour.
The Australian Securities and Investment Commission has alleged that the $10 billion Adelaide-based industry fund Statewide, has made false or misleading representations about its insurance cover held by members, charging them for insurance that did not exist.
ASIC alleged that between May 2017 and June 2020, Statewide deducted a total of $1,500,000 from superannuation accounts of certain fund members, despite those members not having had cover under Statewide’s insurance policy.
In addition, Statewide sent annual statements and warning letters to approximately 12,500 fund members, representing the held insurance cover at a time when those members did not have cover under a the fund’s insurance policy.
ASIC alleged that in making these representations, Statewide breached its obligations as an Australian Financial Services Licence holder to act efficiently, honestly and fairly and to comply with the financial services laws.
The corporate watchdog also alleged the super fund failed to report breaches within 10 business days.
ASIC claimed that Statewide was aware of the breach between 22 July 2019 and 20 August 2019, but did not report it to ASIC until 20 September 2019.
“Statewide Super acknowledges today’s announcement of the commencement of civil proceedings by the Australian Securities and Investments Commission,” Statewide said in a statement.
It put the issue down to a “self-reported insurance administration error.”
“Statewide Super will communicate with, and then remediate, any affected current and former members as soon as possible, and all entitlements will be honoured,” the statement reads.
According to Statewide, the issue arose when it stopped manually administering certain processes, which ensured members with balances below $4,000 were not charged life insurance. When the super fund moved to an automatic system, they did not incorporate the insurance rules.
“Statewide did not conduct structured, successful testing of insurance data and end-of-month processes by which insurance statuses were updated and premia deducted within Acurity prior to its implementation,” the ASIC court documents say.
Statewide has become the second fund in the last few days to be taken to court by ASIC, following Retail Employees Superannuation (REST), which faces 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.
Responding to ASIC’s announcement, REST said in a statement that 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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