An unnamed superannuation fund took more than 500 days to approve a death benefit payment to an Indigenous woman grieving the loss of her husband and ignored her concerns about financial hardship and a confusing claims process.
The “distressing” case has been highlighted by the financial regulator as one of many “poor industry practices” by funds that have had “devastating impacts” on members experiencing “deep grief, vulnerability, frustration and genuine suffering”.
A “landmark” report released by the Australian Securities and Investments Commission (Asic) on Monday has made 34 recommendations to overhaul the superannuation sector. The report investigated the conduct of 10 trustees, which are responsible for 38% of all member benefits in Australia.
Asic’s chair, Joe Longo, said the report “identified a range of issues including excessive delays, poor customer service and ineffective claims handling procedures”. He called on the industry to “take ownership of the problems and flex their muscle to fix the failings”.
“At the heart of this issue is leadership that doesn’t have a grip on the fund’s data, systems and processes – and ultimately it is the customers who suffer for it,” Longo said.
“This kind of disconnect 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.”
A death benefit is the amount of superannuation a person has remaining in their account after they die. This can be transferred to a family member to ensure bills and expenses can be covered. This payment may also include life insurance payments.
The review of 10 superannuation funds comes after Asic lodged federal court proceedings alleging Cbus failed to process more than 10,000 claims for death and disability payments within 90 days. More than 6,000 members were forced to wait more than 12 months for payments. Cbus has apologised and promised to overhaul its processes.
The 10 reviewed funds include Australian Retirement Trust, Avanteos (Colonial First State), Brighter Super, Commonwealth Superannuation Corporation, Hesta, Hostplus, NM Super (AMP), Nulis (MLC), Rest and UniSuper. The report found some funds had performed better than others, but all needed to improve.
The review found communication with First Nations claimant was “often not culturally sensitive” and that their death benefits often took longer to deliver.
The report highlighted the case of a First Nations woman who lodged a claim for a death benefit after her husband died. He had a death benefit of around $100,000. According to Asic, she repeatedly told an unnamed fund she was suffering financial distress and struggling to navigate the claims process.
“The trustee did not respond to the wife’s concerns about financial hardship,” the Asic report said.
The woman had already raised concerns about lacking “standard identification documents for her deceased husband”. Asic allege the fund “took more than a year to offer the wife alternative identification options”.
“The trustee finally decided to pay the wife after more than 500 days,” the report said. “However, as of the date we collected the claim file, the wife still had not received payment.”
Asic commissioner Simone Constant said “grieving Australians should not have to suffer further stress because of the failure of superannuation trustees to approach claims in a timely, clear and respectful manner”.
“Many of the complaints we read were distressing. We saw deep grief, vulnerability, frustration and genuine suffering,” Constant said.
“The money from a death benefit can make a huge difference and each day a trustee delays that payment causes real harm to families. Trustees need to do better.”
The 10 superannuation funds examined by Asic are yet to respond to the regulator’s findings but have previously outlined measures to improve their performance.
In November, several of the funds mentioned in the Asic report said they had overhauled their internal processes to improve customer outcomes.
