The corporate watchdog has commenced proceedings in the Federal Court against Statewide Superannuation (Statewide), for false or misleading representations made about the insurance cover held by members of the Statewide Superannuation Trust (Fund). Statewide is the trustee of the Fund.
The regulator stated that from May 2017 to June 2020, 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 Statewide insurance policy.
It is also alleged that Statewide deducted monthly insurance premiums, which are worth approximately $1.5 million from superannuation accounts of certain Fund members when those members did not have cover under a Statewide insurance policy.
“ASIC alleges 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 regulator stated.
“ASIC also alleges Statewide failed in its breach reporting obligation to report these breaches to ASIC within 10 business days.”
The regulator said it is seeking declarations, pecuniary penalties, injunctions relating to a remediation program and publication orders.
The date for the first case management hearing is yet to be scheduled by the court.
Statewide is the trustee and registrable superannuation entity licensee of the Fund. As of 30 June 2020, the Fund had approximately 153,204 members and $9.8 billion in total assets.
At the relevant time, Statewide maintained group life and income protection insurance policies where Fund members were eligible to be insured for death, total and permanent disablement and income protection. In or around May 2017, Statewide changed its superannuation administration system.
The ASIC action is the second case filed against a major industry super fund after ASIC had previously commenced civil penalty proceedings in the Federal Court against Rest, a superannuation trustee, for false or misleading representations made about the ability of its members to transfer their superannuation out of the Retail Employees Superannuation Trust.
ASIC stated it has identified superannuation trustee practices around insurance in superannuation as requiring improvement and has been working on a number of initiatives to improve practices.
“Where necessary, ASIC will use enforcement action to deter misconduct by trustees concerning insurance in superannuation,” the regulator said.
