Super Fund Sued Over Claims Handling Failures

ASIC has alleged more than 10,000 members and claimants of the Construction and Building Unions Superannuation Fund (Cbus) were impacted by death benefits and TPD claims taking more than 90 days to be processed.

Civil penalty proceedings filed by ASIC against the trustee of Cbus – United Super Pty Ltd, allege that from September 2022 to November 2024, the trustee failed to act efficiently, honestly and fairly in the handling of claims for death benefits and TPD insurance.

The regulator alleges that despite receiving reports from its third-party administrator, United Super failed to properly assess the scale of the impact to members and claimants, where it says the financial loss has been estimated by Cbus to be $20 million to members and claimants.

ASIC Deputy Chair, Sarah Court, noted that by late 2022, more than 6,000 Cbus members and claimants had their payments delayed by more than 12 months. “Extraordinarily…,” said Court, “…that equates to more than 50% of Cbus’ total claims at that time.” She added that ASIC alleges the trustees are yet to completely rectify these issues.

In its statement, ASIC alleges that even when a response was undertaken by United Super in October 2022, this response was inadequate and insufficient to resolve the issue.

The regulator further alleges that despite the matter being brought to the attention of the Cbus Risk Committee between November 2022 and February 2023, the trustee of Cbus failed to report these issues to ASIC as required within 30 days of becoming aware of them.

ASIC alleges that Cbus may have contravened various provisions of the Corporations Act by failing to:

• Act efficiently, honestly and fairly in the handling of its members’ claims for death benefit payments and TPD insurance payments
• Lodge a reportable situation report within 30 days of becoming aware of a reportable situation
• Take reasonable steps to ensure the breach report lodged on 5 August 2023 was not false or misleading in a material particular

…the regulator alleges Cbus failed its members and claimants at their most vulnerable time

The ASIC Deputy Chair says the regulator alleges Cbus failed its members and claimants at their most vulnerable time, “…and we are taking this case to protect all those vulnerable Australians trying to access the financial support to which they are entitled.” Court added that the systemic failure by superannuation trustees to deliver essential member services in a timely manner is a key priority for ASIC and it will continue to take action to hold trustees to account:

“Delays in claims processing like those alleged by ASIC cause real harm to families who may be relying on the payments to meet critical expenses. This adds to difficult personal circumstances, whether grieving for a loved one or dealing with severe injury or illness. The additional anxiety and pain these delays caused compounded the issues these members and their families faced,” said Court, who also noted:

Trustees cannot outsource accountability when it comes to claims handling

“Trustees cannot outsource accountability when it comes to claims handling. It is the trustee’s responsibility to ensure there is adequate oversight of their systems and to prioritise the resources necessary to deliver the services they have promised to their members.”