Super fund penalised $4 million over 'misleading' insurance information
Super fund penalised $4 million over ‘misleading’ insurance information
31 January 2022
The Federal Court has ordered Statewide Superannuation to pay combined penalties of $4 million for providing members with misleading information regarding their insurance and failing to report the breach to the Australian Securities and Investments Commission (ASIC) in the time required by law.
Justice Anthony Besanko imposed the penalties in December in his judgment of the civil proceedings ASIC filed against Statewide alleging it engaged in “misleading or deceptive correspondence” to members about their non-existent insurance cover.
In the period from May 1 2017 to June 30 2020, Statewide sent more than 14,000 annual statements or other correspondence to at least 7000 fund members representing that they held insurance within their superannuation in circumstances where their insurance cover had lapsed.
Statewide also overcharged premiums of at least $2.5 million to some fund members who no longer held insurance as part of their superannuation accounts.
It failed to report these issues within ten days of becoming aware of them, as then required by law.
“The contraventions… are serious,” Justice Besanko said in a judgment paper released this month, outlining the reasons for his decision.
“They affected a large number of members of the fund and remediation for those members is an ongoing process.”
This is the first civil case in which the court has imposed a civil penalty on a licensee for failing to report breaches to ASIC since new penalty powers were introduced in 2019.
“Statewide provided misleading communication to thousands of its members, telling them they had insurance cover when they did not,” ASIC Deputy Chairman Sarah Court said.
“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.”
Click here for the court ruling.
