On Tuesday (18 January), it was confirmed that the penalty was handed to Statewide Superannuation for “providing members with misleading information regarding their insurance and failing to breach report the issue to ASIC in the time required by law.”
Between 2017 and 2020, Statewide was found to have sent over 14,000 annual statements or other correspondence to at least 7,000 members representing that they held insurance within their superannuation where their insurance cover had lapsed.
Statewide was found to have overcharged insurance premiums of at least $2.5 million to some members and failed to report these issues within 10 days of becoming aware of them.
On 22 December 2021, the court imposed a $3.5 million penalty for the misleading correspondence and $500,000 for failing to report the breach to ASIC.
“Statewide provided misleading communication to thousands of its members, telling them they had insurance cover when they did not. 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,” ASIC deputy chair Sarah Court said.
“When it discovered these issues, Statewide failed to report them to ASIC in a timely manner. Breach reporting is integral to board oversight and risk management by licensees.
“Financial services companies have strict obligations to report contraventions of the law to ASIC, including time limits in which to do so.”
When explaining the reasons for the penalty decision on Monday (17 January) Justice Besanko said that while Statewide’s conduct was not deliberate it highlighted “inadequate management and risk control processes”.
The remediation for the affected fund members is ongoing.
READ MORE: Industry fund insists Federal Court penalty will not be paid by members
So glad to be part of an industry that has people that think it is ok to pile on when a particular type of fund gets prosecuted for doing something wrong.
I am not defending Statewide, but this continued bashing of Industry funds by advisers that are more than likely linked to one of the conflicted retail organisations is becoming pretty outdated. You clearly don’t realise we are all part of the problem, and unless we become more united we will never be taken seriously.
A sector of the industry that is hand-in-glove with one political party. It would be naive to assume that the two major parties are in a battle based on the quality of policy. One party has skin in the game and see us as the enemy.
This is not a level playing field.
No amount of professionalism on our part changes this fact. Industry Funds fund Labor poliitics. That is a fact. Therefore Labor are conflicted, in any legislation they create, as they are beholden to their paymasters. How else do you think intra-fund advice is allowed?
Who are we not to laugh when the Industry Funds run afoul of the law?
And you seem to gloss over the fact that LNP is beholden to the banks and are anti Industry funds…..yet you don’t see that as a problem.
No doubt you are piling on the issues around vertical integrations in the retail sector following Dixons latest announcement.
Great job ASIC, the union fund has broken the rules which results in members being worse off. Your solution is to fine the union fund, who then uses the member funds to pay the fine, leaving the members in an even worse situation.
Pretty sure their insurance will pay it, not the members. Perhaps you need to research.
Not quite – if there is no insurance contract (which is the case -since the cover lapsed) , there is no obligation on the insurer…do you own research please 🙂
Liability insurance would cover it.. not the life insurance which relates to the breach?
Well what do you know, they have some out today highlighting members won’t be paying and their insurance will cover it.
Which will lead to higher premiums which will lead to higher fees.
Is insurance cover available for misleading conduct and or incompetence?
You can’t fine some organisations but not others simply because of the structure.
Other than the fine being too light, ASIC did the right things.
and the epic saga continues….this negative media would not attract any foreign investors from around the world….
Its ok, they’ve got ‘members’ and they’re all in this together remember. So they not only ripped off their clients, now they get the clients to pay the fine. Now that is the ultimate business model.
Love it.
Having worked overseas in the banking world for over 20+ years it constantly surprises me how sloppy OZ large banks and FI s are and how easily they get away with it…
Did they refund the $2.5m first & then they also had the $3.5m penalty?
Forget the fines and fire and ban the trustees and senior management – why are members paying for the fraudulent behaviour of the administrators?
Members believe they they are all in this together?
If this was an individual planner they would have their AR revoked. Because it is a big player the fund members cop the fine and the management team gets away scot-free!
Exactly, this is the problem. No one in the management team ever face any penalties. The CEO of these companies should be the one fined and his/her personal assets taken. If this was the case then these things wouldn’t happen over and over and over and over again.
Don’t the funds for these fines then just come out of the members accounts anyway. If they are not for profit, they cant have their own funds to pay this??
No, its comes out of the insurers pocket.
If this was not an insurable event, then yes, I would assume it would be paid by the members. Just because you have insurance, does not mean they will pay for incompetence and illegal activity.
Who pays the fine? Members?
$4 million seems a bit light on compared to other fines being handed out