Latest news with #HESTA
ABC News
02-06-2025
- Business
- ABC News
Australians give super funds a social licence to operate. Does HESTA's outage threaten that?
Consider this — you try to log into your bank account to move some money around to pay a bill. When you go to log in, you can't. You really need that cash. There's a message at the top of the website — your bank is upgrading its system. You won't be able to log in to your account for seven weeks. You can't withdraw any of your money, other than in exceptional circumstances. Of course, this isn't a real story of a major Australian bank. That would be ridiculous, right? Surely no-one would accept their bank going offline for nearly two months, even if it was with the promise of a better experience for customers on the other side. And presumably the regulators would have something to say. But it's not an entirely hypothetical scenario — one of Australia's major superannuation funds has just restored services, after being offline since mid-April. More than 1 million HESTA members have endured a seven-week long "limited services period" that left them locked out of their accounts until the start of June. The HESTA website bore messages alerting customers, noting that members should contact the fund if urgent payments were required. The reason for the outage was for the fund to switch administration providers, which it said would bring "the opportunity to develop more personalised experiences for members, making it easier for them to manage their super". Consumer advocacy group Super Consumers Australia slammed the length and extent of the outage, arguing it reflected "a real underinvestment in services" and "a lack of strategic vision". With the decision made and the switch underway, all HESTA could do was try to minimise the pain. On Monday afternoon, after normal service was scheduled to have resumed, the fund's website indicated it was receiving a high volume of calls and apologised for inconveniencing customers. When bank customers are mistreated or disrupted, whether it be by poor conduct or technical failure, the banking sector is reminded — by everyone from the media and politicians to consumer groups and outraged customers on social media — of its social licence to operate. That is, the unspoken understanding between the financial institutions and the public, that banks shouldn't just be money-making machines, that there is also an obligation to do right by their stakeholders. Most importantly, their customers. It's a licence that extends to super funds — and it's implicit in the structure of industry funds that are owned and operated by members, for members. That's on top of the legal requirement for all super fund trustees to act in members' best financial interests. Australian workers don't opt in to super so their interaction with the sector isn't by choice. Self-managed super funds (SMSF) can be complex to set up and operate, and require tailored financial and legal advice, so it's unsurprising that they skew older and towards higher-income earners (85 per cent of SMSF members are over 45). That leaves most Australians (among them, the young, and lower and average income earners) in retail or industry super funds — choosing from a limited range of providers to handle a substantial chunk of their income, in many cases for decades. Australians don't frequently change super funds — a 2018 Productivity Commission report found that, historically, fewer than 10 per cent of members switch funds each year. Like bank accounts, the barriers to switching funds can seem like an administrative nightmare, and the resulting loyalty rewards funds, rather than members. ABC News first reported on the HESTA outage after receiving messages from several concerned members, unable to access their funds. Some had been unaware of the outage until it had already begun. Others had received notification several months prior but then had issues withdrawing cash in advance, despite contacting the fund as HESTA had advised. Our reporter Adelaide Miller has continued to received dozens of messages from members over the last seven weeks, some facing financial stress, including several who were at risk of a property purchase falling over. Each time questions were put to HESTA, customers ended up having their situation resolved — HESTA processed their withdrawals and personal disaster was avoided. The super fund even asked Miller if she could pass on the details of any member that had written into the ABC with concerns — apart from obvious privacy issues, the public broadcaster isn't resourced to, and shouldn't, act as a quasi-customer service team. If HESTA members were finding it easier to get in touch with the ABC than with HESTA, that surely raises a bright red flag. To hark back to the bank example, if your bill was looming and you couldn't withdraw your cash online, the likely first port of call would be to phone your bank. Contacting a news organisation is hardly an efficient or logical way to contact your financial institution — and it's extremely unlikely to have been your first instinct. By the time people contact journalists in these types of situations, they've typically exhausted their options, or believe any other avenue will prove futile. Admittedly, some of the HESTA members had not contacted the super fund first. In response, HESTA drew our attention to the communications on their website, referring to urgent transactions still being available. Some of the members who contacted the ABC didn't know whether their requests would fall into the urgent category, so had instead resorted to contingency plans, like borrowing money from friends or family. Others had tried to contact the fund with no success. Whether the members made the right or wrong calls, one thing is clear — and it isn't HESTA's communications. It's that on top of the inevitable disruption caused by the outage itself, the fund's messaging and customer service failed to both 1) inform all members, and 2) accurately convey what transactions were considered urgent. It's easy for HESTA to, in hindsight, process transactions that had been brought to the media's attention and state that the member would've been assisted all along. Of course, the outcome for the members who did have their withdrawals processed is the best-case scenario — but we'll never know how many stressful situations or financial difficulties were created and not redressed. HESTA also has more than 1 million members. People who are still working and accumulating their super are unlikely to be regularly logging in and checking their accounts. For most people, the outage would've passed without event, or even unnoticed. But the times when people need their money often come with high stakes — a death payout awaited after the loss of a loved one, a large withdrawal needed to complete a major transaction. At the centre of the multiple and varied problems facing super members in recent times lies a central issue — customer service. On first glance, a "credential stuffing" cyber attack, systemic issues with death payouts and insurance claims handling, and a multi-week planned outage don't have a lot in common. But all result in a sub-par experience for members — and all reflect the investment decisions made by the funds. Whether it be multi-factor authentication to better protect customer accounts, beefed-up claims handling training and resourcing, or earlier investment in administration platforms, the solutions all involve putting a focus on how members experience their interactions with their super funds. The corporate regulator has death benefit claims handling particularly in its sights, having taken court action against AustralianSuper, and slammed the industry for poor customer service at an extremely vulnerable times of peoples lives. Australia's superannuation pool is worth nearly $4.2 trillion — the funds are undoubtedly extremely adept at taking and investing members' money. But when it comes helping members to access it, they are falling short. Earlier this year, the Grattan Institute highlighted that many retirees continue to grow their super balances decades after they retire, for fear of outliving their savings. The think tank said Australians are mostly steered towards account-based pensions, and half of those using those pensions draw down their super at the legislated minimum rates. Its modelling found those drawing down at the minimum rate when they retire will leave the equivalent of 65 per cent of their original super balance unspent by the age of 92. It's a sign that the default settings leave a lot of money unused and not enjoyed by retirees. After decades of accumulating income for their retirement, it seems many face barriers to withdrawing their funds — including knowing how much is needed to survive into old age, and overcoming the mental hurdle to confidently spend their super savings. The law puts the onus on super funds to act in the best financial interests of members. Those members should be able to access their funds easily when the time comes.
ABC News
23-05-2025
- Business
- ABC News
HESTA members remain locked out of accounts as consumer group calls for more transparency
Daniella Paidi received a distressed call from a client who realised he was at risk of losing his home deposit after being unable to access his superannuation. Her client — a man from regional Victoria — is a member of HESTA, which has been mostly offline since April in a planned seven-week outage. Property lawyer Ms Paidi said her client was just days away from losing his deposit of $28,200 after missing his property settlement date. "Because of this upgrade he's been caught out, and he's now having to deal with the emotional and financial burden," she told ABC News. HESTA's seven-week outage, to change administration provider, left more than 1 million Australians unable to access their retirement funds, except for in exceptional circumstances. Ms Paidi said her client was aware of the outage but didn't realise the extent of what it meant for him and his ability to access his funds. She said it wasn't until she stepped in to support that he did realise. "We reached out to HESTA and we couldn't get on to anybody, we didn't receive a timely response or any kind of clear communication," she told The Business. "There was the opportunity to leave an online inquiry and to make a complaint, and we used both avenues really just to get somebody to speak to." Ms Paidi said someone in her network was able to put her in contact with HESTA, and 80 per cent of funds were deposited into her clients account on May 14. Earlier this week, the remaining 20 per cent landed in his account and his property was settled on Tuesday. A spokesperson for HESTA told ABC News: "Our contact centre and member engagement teams are actively supporting members with their queries. "While there are temporary disruptions to some services, it's important to note that members can still receive urgent and critical payments, and switch investments during the limited services period." But Ms Paidi said too much damage has already been done. "The focus for HESTA going forward, [has to be] really looking at this situation and thinking okay we are entrusted with acting in the best interests of these clients, of our people. "I think the question should be: 'Have we acted in the best interest of our clients here, and how can we do things better in the future?'" Decades-long HESTA member Annette Mumford said she was also caught out by the freeze. "I find it very distressing and I'm just gobsmacked that they have not even notified their customers." However, the superannuation fund said it did inform its members back in February via email, its website, and in some cases, a letter in the mail. Despite this, dozens of HESTA members have continued to tell the ABC they didn't find out about the outage until our report in April. Ms Mumford said she's transitioning to retirement and the situation left her stressed. "I was so distressed thinking 'oh my gosh', because there's no time for planning because it had already closed down without me knowing in advance." She said she called HESTA and put in a formal complaint. Despite alerting customers earlier in the year, Super Consumers Australia chief executive Xavier O'Halloran argued HESTA should have gone above and beyond with its communication. "They should be making the effort to call people and let them know that they are going to be subject to this period of time where they won't be able to access their money, and what they can do to mitigate against any harm that might cause." The Australian Prudential Regulation Authority (APRA) is the independent statutory authority that governs most superannuation funds, including the approval of planned outages. A spokesperson for APRA told ABC News the regulator doesn't comment on entity specific matters and also wouldn't comment on questions more broadly. Consumer advocates condemned the industry regulator for not being open with members about the process for approving an almost two-month outage by one of Australia's major super funds. Mr O'Halloran said transparency from the regulator around these kinds of approvals is "really important". APRA regulates 1,790 financial institutions and according to its website, is "concerned with maintaining the safety and soundness of financial institutions, so that the community can have confidence that they will meet their financial commitments under all reasonable circumstances". Mr O'Halloran said APRA's refusal to comment makes it hard to know what the approval processes look like. He said in comparison, situations involving the Australian Securities Investment Commission (ASIC), make processes and the reasons for approving those processes available to the public. In 2020, ASIC told the public it was granting "relief to industry to provide affordable and timely financial advice during the COVID-19 pandemic". "From my perspective, [ASIC is] far more transparent, makes the case for why relief was needed and placed some conditions on its use to minimise consumer harm," Mr O'Halloran told the ABC. He thinks APRA should do the same. Whitley Bejah, a personal finance researcher at Griffith University, isn't in favour of a blanket need for transparency from APRA around outages, but says the HESTA outage is an exceptional case. "If it's a small outage, I would say [no transparency is needed from APRA], but due to the large time frame associated with the HESTA outage, I would think having something small on [APRA's] website could be useful for Australians who did not receive the trustee's correspondence," she said. But ultimately, she said the responsibility lies with the super fund. "I think APRA has enough to worry about … it's up to the trustee to inform the members well ahead of time so that people can plan ahead." Despite alerting customers at the end of February, Ms Bejah argued more notice was necessary from HESTA, particularly from those relying on their super as part of the First Home Super Saver Scheme. "I'm not convinced HESTA gave enough time for members to prepare for the planned outage."
ABC News
21-05-2025
- Business
- ABC News
Why HESTA super fund members are locked out of their accounts
Some members of major superannuation fund HESTA have expressed outrage and concern over its seven-week planned outage, affecting more than one million Australians.
Yahoo
13-05-2025
- Business
- Yahoo
Australian pension fund HESTA sells stake in MinRes amid governance concerns
Australian pension fund HESTA has divested its remaining shareholding in mining services provider Mineral Resources (MinRes), citing unresolved governance concerns and a lack of confidence in the company's ability to implement necessary changes. HESTA's stake in MinRes is valued at approximately A$14m, reported Reuters. The decision follows the abrupt resignations of three directors in April, who were part of the ethics and governance committee established in November 2024. These departures have intensified scrutiny over MinRes, particularly regarding allegations against the company's founder and managing director, Chris Ellison. Accusations include tax evasion and the misuse of company resources for personal endeavours. HESTA stated that a potential future reinclusion of MinRes shares in the fund's portfolio would require a clear plan to address governance issues. The company added that the establishment of effective safeguards to prevent future incidents and a well-managed succession for the managing director are prerequisites for any reconsideration of investment. HESTA initially placed MinRes on its watch-list in October 2024, reflecting concerns over inadequate measures to tackle governance problems. This divestment follows a prior reduction in the fund's holdings of MinRes last year. Despite the sale, HESTA will maintain a watching brief on the company. HESTA CEO Debby Blakey said: 'Last year we outlined our concerns that the managing director's succession time frame did not reflect the seriousness of the issues, and the issues indicated a systemic failure of governance. We have since regularly engaged with senior leaders and directors at the business to encourage action we believe necessary to restore investor confidence. 'The departures of the directors on the ethics and governance committee last month in our view represented a significant step backwards in seeking to address the serious governance concerns. Given these departures and the forthcoming succession of the Chair, we don't currently see a path to our concerns being addressed. 'We are focused on the delivery of strong long-term returns to our members, and believe selling our remaining holdings was in their best interests at this time. We may reconsider our position if circumstances change.' In November 2024, MinRes cut 570 jobs and slowed down the underground construction at its Mt Marion lithium project in Western Australia, amid Chris Ellison's tax evasion probe. "Australian pension fund HESTA sells stake in MinRes amid governance concerns" was originally created and published by Mining Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
12-05-2025
- Business
- Reuters
Pension fund HESTA exits Australia's Mineral Resources, flags governance issues
May 12 (Reuters) - Australian pension fund HESTA said on Monday it had sold its remaining stake in billionaire Chris Ellison-founded Mineral Resources ( opens new tab, citing "serious governance concerns". The mining services provider has been grappling with governance issues, primarily involving Ellison, with allegations including tax evasion and misuse of company resources for personal projects. In an email to Reuters, HESTA confirmed it had divested approximately A$14 million ($8.99 million) worth of its stake in MinRes. HESTA said concerns about the company's governance were not addressed quickly enough, despite repeated engagement with the board. It added that departures of directors on the ethics and governance committee were a "significant step backwards" in addressing the concerns. ($1 = 1.5571 Australian dollars)
