Fund Regulatory Update

ASIC commences civil proceedings against Rest on deception allegations

The Australian Securities and Investments Commission (ASIC) has taken action against Rest industry superannuation with allegations of false or misleading representations made regarding members’ ability to transfer superannuation account balances out of the fund. Between 2015 and 2018, Rest made claims orally, in writing and in publications and forms provided to members discouraging, delaying or preventing members from transferring funds out of Rest to other funds.

ASIC is claiming that Rest members were denied their lawful rights to super portability and choice of fund, which caused financial loss. Rest gained greater funds under management than it might have, with ASIC alleging that Rest retained around $15 million from over 1,000 members where rollover requests were refused or only partially allowed.

Rest significantly increased its funds under management from the members who were denied transfers, with the effect sometimes being substantial, including emotional distress and confusion, ASIC said.

ASIC alleges that the fund indicated to members who wanted to transfer their super had to keep a minimum balance of $5,000 with Rest if they stayed employed by the organisation making their contributions. This was published in the Rest Members Guide for three years, from 2014 to 2017.

It is also alleged by ASIC that Rest made representations that members required a declaration from their employer. If the employer was willing to contribute to a different fund, the date, or the member’s ‘choice of fund rights’. This declaration was made in writing nearly 32,000 times to Determination Members.

ASIC is also alleging that Rest led members to believe that if they weren’t employed by their Rest employer, they must provide a separation certificate or confirmation of terminated employment before they could transfer out their superannuation balance.

Rest self-declared the issue and is remediating affected members.

ASIC takes Statewide Super to court, alleges premiums paid for no insurance

ASIC has taken action against Statewide Super alleging the industry superannuation fund was charging members who didn’t hold group cover for insurance premiums. ASIC is alleging that between 2017 and 2020 the fund sent annual statements and warning letters to 12,500 members detailing insurance cover when they didn’t have an insurance policy through Statewide.

ASIC is also alleging that Statewide Super took premiums from accounts for about $1.5 million from about 1,300 members who didn’t hold cover. Statewide’s group insurer is MetLife Australia. Statewide became aware of the charges in 2018 but did not notify members or stop the premiums from being charged again, it is alleged. The error is being blamed on an administration error and was self-reported to ASIC.