An ASIC report into super fund death benefit claims handling reveals the devastating impacts current industry practices are having on grieving Australians.
Its Report 806 includes 34 recommendations for superannuation trustees and identifies a range of issues including:
- Excessive delays
- Poor customer service
- Ineffective claims handling procedures
ASIC Chair Joe Longo is calling on industry leaders to take ownership of the problems and flex their muscle to fix the failings, with his report finding 80% of reviewed claims were delayed by processing issues within the fund’s control.
…ultimately it is the customers who suffer…
“This is an important report that looked at 10 trustees, representing a total of 38 percent of all member benefits in superannuation funds regulated by the Australian Prudential Regulation Authority,” says Longo.
“While some trustees performed better than others, tellingly none of the reviewed trustees monitored or reported on their end-to-end claims handling times or performance.”
At the heart of this issue, says Longo, is that super fund leadership doesn’t have a grip on the fund’s data, systems and processes.
He says the kind of disconnect ASIC found is “…unacceptable in any area of corporate Australia, but in the superannuation sector it is particularly serious, because super affects everyone from the boardroom to the living room…And ultimately it is the customers who suffer for it”.
ASIC Commissioner Simone Constant says she is calling on the superannuation industry to immediately review and address death benefit claims handling deficiencies and suggests the following:
- Better customer service and faster response times
- Improved monitoring and reporting on claims handling timeframes
- Streamlined processes and procedures
- Better guidance and training for staff
- Removing barriers for First Nations members and claimants
- Clearer communications and more support for members
Constant says there was huge variation in claims handling times across trustees reviewed by ASIC and that trustees had a lot of control over how quickly claims are settled.
“Many of the complaints we read were distressing,” says Constant. “We saw deep grief, vulnerability, frustration and genuine suffering.”
First Nations
In one case, a trustee took more than 500 days to pay a death benefit of around $100,000 to a First Nations woman who was grieving the loss of her husband, says Constant.
Leading First Nations advocates are now calling on parliamentarians to commit to legislated mandatory customer service standards in superannuation.
Super funds do a great job collecting our money, but let us down when it matters most…
Despite handling billions of dollars in retirement savings, most super funds still don’t know which of their members are First Nations, states Mob Strong Debt Help, a part of the Financial Rights Legal Centre.
“Trust is key to super trustees,” says Mark Holden, Mob Strong Debt Help Senior Solicitor and Policy Advocate.
“Super funds do a great job collecting our money, but let us down when it matters most – when we’ve lost someone, when we’re grieving, and when we need access.”
Barriers
Unaisi Buli, Senior Financial Counsellor with the Indigenous Consumer Assistance Network, says: “A set of standards across the superannuation sector that recognise and address cultural barriers would facilitate easier access for First Nations peoples.
“When our clients need to access their super early, which is their own hard-earned money, superannuation companies put up a multitude of barriers that make accessing this super extremely difficult and a demoralising experience.
“In the case of one Cape York client who was denied access to his super under financial hardship, the only thing that he could do to access his super was to move it to another company that had a different set of rules.”
…super funds are blind to their own failures…
Super Consumers Australia CEO Xavier O’Halloran says ASIC’s findings show super funds are failing in their basic responsibilities to members and their families.
“This report confirms what we’ve been hearing from families in crisis, super funds are blind to their own failures, with no targets, no monitoring, and no accountability,” he says.
“It’s shocking that no fund has set a target for how long it should take to process a death benefit claim. As a result we’ve seen people subject to years of delay.
“These are people who’ve just lost a loved one – and they’re forced into a bureaucratic maze with no end in sight.”
Following the release of ASIC’s report the regulator will review the progress all trustees have made on improving their death benefit claims handling processes to ensure that they are appropriately prioritising the needs of members and their beneficiaries.
