Super complaints jump 45%, AFCA urges transparency

AFCA has reported a considerable uptick in complaints against super funds in calendar year 2023.

Australian Financial Complaints Authority’s (AFCA) Dr June Smith told the Senate estimates that the complaints authority received 8,122 complaints against superannuation funds in the last calendar year, a 45 per cent increase on the year earlier. 

Of that total number, 27 per cent related to a delay in claims handling, while others pertained to delays in complaints handling – both of which Dr Smith said is particularly concerning. 

“We have active conversations with superannuation funds and insurers across the year, and we have reported matters to ASIC and to APRA in relation to some of those matters,” Dr Smith said. 

She noted a number of reoccurring themes, some relate to changes seen in fund administrators, alongside a number of death benefit claims accusing funds of significant assessment and payment-related delays. 

“We’ve had issues around income protection and TPD claims as well, where there are claims of there being additional and unnecessary requests for information and delays in making a decision … as well as with denials of claims as well.

“There are trends and patterns.” 

Superannuation funds have recently been under fire for delays across business operations, with Dr Smith noting that the issues stem from a lack of proactive resourcing of claims and complaints handling staff. 

“We have been encouraging all industries to push further and look at, not only their resourcing, but also the way in which they connect in through the different organisations that have a part in the chain of decision-making regarding claims.

“We’d like to encourage the superannuation funds to be far more proactive in their communication with members about where a claim is at in the process, what is needed for a claim, and when people are in vulnerable circumstances, assist them to navigate that process.”

Speaking to Super Review last month, AFCA’s chief operating officer, Justin Untersteiner, said: “Super and insurance make up the complaints regarding delays in claims handling; there has been an enormous increase in complaints against super trustees and top of that was complaints about delays in claim handling.

“We are encouraging trustees to review this as lengthy delays aren’t fair on consumers.”

In November, Minister for Financial Services Stephen Jones called on super funds to lift their game and make material, meaningful changes to their processes, and there was action taken by ASIC against TelstraSuper for failing to comply with internal dispute resolution requirements. 

He told 2GB Sydney: “I started saying to the funds, ‘This isn’t good enough. You’ve all got to lift your game.’ You’ve got 12 months to lift your game. And if you don’t meet the appropriate standard, then there’ll be regulatory standards.

“The sort of action that is being imposed upon TelstraSuper by the ASIC at the moment, where they’re being prosecuted for not meeting even the existing standards in relation to dealing with member complaints, we want to ensure that the regulators have the appropriate stick and the appropriate tools available.”

At the end of 2023, AustralianSuper opted to insource its complaints handling among several changes to its claims management process. This includes insourcing its death claims management through a new Bereavement Centre, while also implementing additional complaints handling capability by the end of the financial year. 

The establishment of a dedicated Bereavement Centre will leverage the specialist expertise of the fund’s internal team and ensure members’ savings are paid to their loved ones efficiently, AustralianSuper said. 

This change followed AustralianSuper’s decision to transition to a new claims assessment model with its insurer TAL in 2022.

Untersteiner commented: “We are working closely with the largest trustees and are seeing changes, but it will take time. We have seen one fund insource its complaints and that could be a positive move, but we will be watching it closely. 

“The industry is trying to improve, but the proof will be in the pudding.”