More than 5,000 people have lodged complaints with a financial watchdog about how the 10 largest superannuation funds have handled death and group insurance claims over four years.
Complaints to the Australian Financial Complaints Authority (Afca) about the entitlements – a lump sum provided to a member’s family when they die – have increased each year since 2020/21. They rose from 921 to 1,048, then 1,459 and 1,611.
Consumer groups believe this increase supports the Australian Security and Investment Commission’s (Asic) concern that a scandal involving unacceptable delays in processing claims is not confined to industry fund Cbus.
Last week, Asic lodged federal court proceedings that allege 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 Asic deputy chair, Sarah Court, said the delays caused “real harm to families” who were relying on the payments to meet critical expenses, and put the entire industry on notice.
“We’re going to be putting out a detailed report early in [2025] that really sets out the work that we are doing, and we may well have further enforcement action to follow,” Court said.
Part of that report will assess Afca complaints and internal dispute resolution data extracted from all trustees since early 2023.
Afca data shows 1,400 complaints were lodged about Australian Super’s handling of death and group insurance claims over the last four financial years. Complaints jumped from 207 in 2020/21 to 519 two years later, before falling to 386 last year.
An Australian Super spokesperson said the fund – which manages $341bn on behalf of 3.4m members – resolved about 70% of death claims within four months of receiving them. They said the fund had recently created a team of 180 staff to help members with claims.
“The remaining cases are often complex with multiple beneficiaries and in all of them we are waiting for more information from the claimant,” the spokesperson said.
The data shows 507 complaints were made about Australian Retirement Trust over the four years. Complaints more than tripled from 73 in 2020/21 to 227 last financial year. This fund manages $300bn for 2.4m members.
Aware Super recorded 313 complaints over the four years, according to the data. They increased from 49 in 2020/21 to 127 last financial year. A spokesperson for the fund said the jump “coincided with a major operational transformation to insource our administration and digitise our processes”.
“This transformation has been completed and claims processing times have since been substantially reduced,” the spokesperson said.
HostPlus had 340 members register complaints with Afca during this period, jumping from 50 in 2020/21 to 87 last year. A spokesperson for the fund said it had a comparable low complaint rate.
“While there has been a very small increase in the number of complaints received by Afca since 2020, it coincides with a period of considerable growth in our fund membership – increasing from 1.3 million members to 1.8 million members – as well as an increase in total claims paid relative to fund members over the same period,” the spokesperson said.
More than 480 complaints about NM Super (AMP) were registered with the volume relatively stable over four years. An AMP spokesperson said it was changing its claims process to “ensure a better experience” for members.
“This includes a strengthened claims team and new digital capability to make the process easier for members,” the AMP spokesperson said.
None of the top 10 superannuation funds recorded a drop in complaints based on 2020/21 figures.
The chief executive of Super Consumers Australia, Xavier O’Halloran, said the Afca data “strongly supports Asic’s claim there is a systemic issue” that is not limited to Cbus.
“It is clear that across the board, there are problems with customer service at superannuation funds,” O’Halloran said. “In the last two years, there have been big trend line increases for these type of complaints.”
