Australia's biggest retirement fund faces court action after families had to wait years to get their dead relatives' money.
AustralianSuper took between four months and four years to assess at least 6897 death benefit claims, the Australian Securities and Investments Commission alleges.
In one case, the fund took 1140 days to make a payment despite having all the information required to pay the benefit.
Managing more than $355 billion of savings on behalf of 3.5 million members, AustralianSuper is the nation's largest retirement fund.
It was responsible for almost a quarter of all death benefit grievances to the Australian Financial Complaints Authority over the past two financial years.
The financial regulator's Federal Court proceedings against AustralianSuper follow the watchdog levelling similar allegations against industry super giant Cbus for delays in paying out death benefits to more than 10,000 members.
ASIC chair Joe Longo said reports of member service failures in the superannuation industry had become more common and came down to management not knowing their business.
"The industry is the current poster child for what can and does go wrong when governance fails," he told the Institute of Company Directors' Australian Governance Summit on Wednesday.
"This matter is about protecting vulnerable Australians and their families. It is also a demonstration of what can happen when there is not adequate oversight of systems in an organisation."
AustralianSuper said it was considering ASIC's claim and would respond in due course, saying the pandemic clogged its processing systems.
"Paying out members' retirement savings after they die is the final service we provide them," it said in a statement.
"During COVID, a sharp increase in member deaths and a significant impact of the pandemic on staffing numbers saw a backlog relating to the processing of death claims emerge.
"We recognised this and developed a strategy with our service provider to clear the backlog of claims. Despite some improvement, we were not satisfied the backlog was reducing fast enough so we made the significant decision to bring the processing of death claims in house."
AustralianSuper was also fined $27 million in February for failing to merge multiple member accounts.
ASIC's ire is not confined to management of superannuation companies.
In his speech, Mr Longo took a thinly-veiled swipe at board members of ASX companies, such as Mineral Resources and WiseTech, for failing to hold CEOs to account for poor behaviour.
"Effective governance requires rigorous, diligent back-and-forth between management and the board," Mr Longo said.
"The board should support management - but it must also question it."
He said boards could not simply rely on the judgment of management if they were aware of information that aroused suspicion.
"The health of the relationship between a board and senior management is, I would say, also at the heart of several well-publicised issues in recent times," Mr Longo said.
"Some of these issues, and many that ASIC deals with, start with poor personal behaviour before turning into more serious corporate misconduct.
"Now, not all poor personal behaviour leads to governance issues, but governance issues allow poor personal behaviour to thrive."
The comments follow claims of inappropriate behaviour levelled at WiseTech CEO Richard White and MinRes founder Chris Ellison's alleged involvement in a tax evasion scheme.
