The Australian Securities and Investments Commission has initiated action against industry superannuation fund, REST for false and misleading representations.
The regulator has announced the commencement of civil penalty proceedings in the Federal Court against Retail Employees Superannuation Pty Ltd (REST) for false or misleading representations made about the ability of its members to transfer their superannuation out of the Retail Employees Superannuation Trust (the fund).
ASIC is alleging that, from at least 2 March 2015 to 2 May 2018, REST made representations that discouraged, and in many cases delayed or prevented, members from transferring some or all of their funds to another superannuation fund.
It said in a statement that ASIC’s case is that these members were denied their lawful rights to superannuation portability and choice of superannuation fund, causing members to suffer financial loss. ASIC further alleges that this conduct resulted in REST retaining a higher level of funds under management than would have otherwise occurred.
Specifically, ASIC alleges REST made representations to members who made, or were considering making, full balance transfers to another fund that:
- if they remained employed by an employer who made contributions to the Fund (REST employer) and that employer continued to make contributions to REST, they were required to keep a minimum balance of $5,000 in their account with the fund;
- if they remained employed by their REST employer but their employer was willing to contribute to another fund, members needed an employer declaration stating either the date the employer stopped making contributions to the Fund or confirming the member's 'choice of fund rights' in order to leave the fund;
- if they were no longer employed by their REST employer, members needed to obtain a separation certificate or confirmation of their termination date from their employer and provide this to REST before they were able to transfer the full balance of their REST account to another super account.
In a statement reacting to the ASIC announcement REST said that, as a profit-to-member fund, it had the best financial interests of members at its core.
“We are disappointed with ASIC’s decision to launch proceedings about a matter that Rest reported to the regulator, and for which REST is remediating affected members,” it said.
“The proceedings relate to the disclosure of an internal business process that was removed in May 2018 that required some members to provide an employment termination date or separation certificate to process a rollover of superannuation from Rest into another fund.”
“REST is currently contacting and remediating members who may have experienced a delay in the transfer of their super as a result of the application of this business process between 1 January 2014 and 2 May 2018.”