One of Australia’s largest superannuation fund trustees will have to pay a $23.5m penalty for “systemic and unreasonable delays in handling insurance claims”.
The Federal Court found that serious failures by United Super Pty Ltd – trustee of the Construction and Building Unions Superannuation Fund (Cbus) – led to lengthy processing delays for thousands of members and claimants seeking death benefits and TPD payments.
The penalty exceeds the $18.5m revenue United Super reported in the 2024 financial year, and comes on top of Cbus’s $32m remediation program to compensate 7,402 affected members for lost earnings and wrongly charged fees.
The court heard that between October 2022 and November 2024, Cbus outsourced its claims processing to Australian Administration Service Pty Limited.
…You cannot outsource your obligations…
ASIC Deputy Chair Sarah Court said Cbus’s failures “…needlessly exacerbated the distress” of people already facing grief or life-changing injury.
“Thousands of Australians suffered real and avoidable harm because of long delays and systemic failures in the way Cbus handled important and sensitive insurance claims,” she said. “You cannot outsource your obligations.”
Court also said Cbus had been alerted to rising claim volumes and member complaints but failed to act, and added that claims handling remains an ASIC enforcement priority.
…serious and unacceptable consequences…
“This outcome underscores a message to the whole industry to get it right, especially when your members need it most,” Court said.
In his judgment, Justice O’Callaghan said delays in paying benefits had “serious and unacceptable consequences,” citing a case where a widow waited 15 months for a death benefit before speaking publicly, prompting Cbus to investigate and notify ASIC.
He emphasised that as Australia’s ninth-largest fund, with more than $95bn in assets, Cbus should have had robust systems to prevent and correct errors.
The court found United Super breached the Corporations Act by failing to process claims efficiently, maintain accurate data, oversee committees, and properly monitor its administrator. It also failed to report breaches to ASIC on time.
United Super was additionally ordered to contribute $500,000 to ASIC’s legal costs and undertake a compliance program to ensure its systems now meet legal obligations.
Click here to see the full judgment.
