ESSSuper in Legal Battle with Iress Over Outsourcing Contract

Emergency Services & State Super (ESSSuper), the superannuation fund catering to Victorian government employees and emergency services personnel, has initiated a civil lawsuit against Iress, a prominent financial services software developer and service provider. The suit, filed in the Federal Court, accuses Iress of breaching its contractual obligations, as well as making pre-contractual misrepresentations, which have resulted in significant operational disruptions and financial losses for ESSSuper. The claim outlines the negative impact these alleged failures have had on the fund’s members, citing damages incurred as a result of prolonged issues with the outsourced back-office technology and administration services provided by Iress.

In late 2019, ESSSuper made the decision to outsource its back-office operations to Iress, with the intention of streamlining its processes and offering better, more efficient online services for both employers and members. At the time, the decision was aimed at improving the accessibility and functionality of online systems, enhancing user experience, and addressing growing demands for digitalization. However, according to ESSSuper, the transition has been fraught with problems, and the anticipated improvements have not materialized as expected.

The board of ESSSuper claims that multiple incidents of non-compliance with the agreed contract terms have occurred since the partnership began. These alleged breaches, the fund argues, have caused significant disruptions in service delivery, creating frustration and inconvenience for its members. ESSSuper further states that despite repeated attempts to address these issues through direct engagement with Iress and invoking dispute resolution mechanisms outlined in their agreement, the company has failed to adequately remedy the situation.

As a result, the fund has had to expend additional resources, including financial and human capital, to mitigate the negative effects of the problems caused by Iress’s services. This has included engaging third-party contractors to help resolve the technical issues and compensate for the lack of effective solutions from Iress. ESSSuper asserts that the disruption has not only harmed its operations but has also caused substantial inconvenience for its members, undermining the trust and confidence they had in the fund’s ability to manage their superannuation effectively.

In a statement, ESSSuper’s board emphasized that it is a member-focused fund and that taking legal action is never their preferred course of action. However, after extensive efforts to resolve the issue directly with Iress, the board felt it had no choice but to file the lawsuit. The fund cited the ongoing lack of resolution to their concerns and the significant impact on both its members and operations as the driving forces behind the legal proceedings.

In response to the lawsuit, Iress has denied all claims made by ESSSuper and has stated that it intends to file a formal defense as required by the court. Iress has also confirmed that it continues to provide the services outlined in the original contract, despite the ongoing dispute. The company has expressed confidence that it will be able to address and resolve the legal challenges in court.

The case is set to have significant implications for both ESSSuper and Iress, as it raises important questions about the responsibilities and obligations of third-party service providers in the financial services and superannuation sectors. This legal battle highlights the importance of clear, enforceable contracts and robust dispute resolution mechanisms, particularly when it comes to managing critical back-office operations that directly affect the experiences and outcomes for members of a superannuation fund.

For ESSSuper, the case is not only about seeking compensation for damages but also about ensuring that its members receive the level of service they deserve. The outcome of this lawsuit will likely set a precedent for how other superannuation funds and financial institutions handle disputes with their service providers, particularly in an era where digital transformation is critical to their operations.