Tower in court over technology payment blunder
Financial services groupTower Australiawill meet theAustralian Securities and Investments Commission(ASIC) in court tomorrow after incorrect payments were made to its superannuation policyholders.
The legal action against Tower follows the revelation that Tower underpaid around 1,000 of its superannuation policy holders while overpaying some 3,000 others between 1993 and 2001.
ASIC claims Tower has breached the Trade Practices Act 1974 and is seeking an order in the Federal Court allowing Tower only 28 days to repay affected customers any owed payments.
The group says it will not require those customers who mistakenly received thousands of dollars in overpayments to return the money, despite Tower chief executive Jim Minto revealing that the ratio of those overpaid to underpaid was three to one.
“Even if they are still clients, we will not be recovering the money because we feel it's been overpaid for a long time and it was through no fault of theirs - it was our fault,” Minto says.
According to Minto, Tower has set aside $600,000 on its balance sheet to cover the payment mix-up, which it became aware of late last year.
Customers who changed their policies between 1993 and 2001 from the original terms, either by alteration of contributions or inducing an exit payment, have been affected by the errors.
Minto says the problems occurred when Tower’s computer system failed to calculate the proper payments the company either owed to customers or they to Tower, but added that staff then manually calculated the payments from the detection of the computer problem in 2001.
AUTHOR
Lucie Beaman
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