The Federal Court has handed Australia’s biggest industry super fund a $27 million fine for its failure to inform members of duplicate accounts.

Federal Court Justice Lisa Hespe labelled the compliance breach – prosecuted by regulator ASIC – as “serious and highly concerning”.

The Court found the AustralianSuper had, for several years, failed to promptly identify and merge thousands of members identified as having multiple accounts – a requirement under the Superannuation Industry (Supervision) Act 1993 (SIS Act).

Additionally, Justice Hespe wrote in her judgement, the super fund “did not exercise, in relation to the interests of that beneficiary, the same degree of care, skill and diligence as a prudent superannuation trustee would have exercised” as required under the SIS Act.

More than 42,000 AusSuper account holders were affected between 2019 and 2023, the Court found.

“AustralianSuper is Australia’s largest industry superannuation fund,” Justice Hespe said in her judgment.

“It is inexcusable for it to not have had processes and systems in place to ensure compliance with a specific legislative requirement.”

She added: “Its systems also failed to ensure that repeated human errors in relation to the failure to merge the multiple accounts were prevented or promptly identified and corrected.”

“Failures of this kind involving a failure to have processes and procedures in place to make individuals responsible and accountable for ensuring regulatory obligations are complied with warrant substantial penalties.

“A failure to put in place systems and processes to ensure duties are performed efficiently, honestly and fairly and that trustees act in the best financial interests of the members cannot be regarded as a commercially acceptable option.”

AustralianSuper’s chief executive Paul Schroder expressed regret for the breach, admitting that the super fund’s process “wasn’t comprehensive enough”. He added that the company has since compensated affected members.

“Multiple member accounts are a problem across our industry and for several years our process wasn’t comprehensive enough to meet our obligations to members,” Schroder said in a statement.

“We’ve fixed that now and we continue to review and improve our services, so we provide members with the support and guidance they expect and deserve.”

In addition to the $27 million fine, the Court has ordered AustralianSuper to pay ASIC’s costs up to $500,000.