Administrator’s mistake costs fund

A superannuation fund has been ordered to pay the legal costs associated with a member lodging income protection claims documents, following a mistake by the fund's administrator.

The Superannuation Complaints Tribunal (SCT) has ordered the payment of the legal costs because the administrator had dispatched the claim forms to the member event though she had never held income protection coverage under the fund.

The member had complained to the SCT that she had been unreasonably denied income protection coverage, but the Tribunal noted that she had been erroneously informed by the administrator that she was eligible for IP cover following a major car accident.

The SCT upheld the decision of the superannuation fund and its insurer to deny the IP claim, but stated "it was unfortunate that the Complainant was erroneously informed on 19 October 2012, by the Trustee's Administrator that she was eligible for IP Cover, ‘based on the belief that the records held about [the Complainant's] employment start date were incorrect'".

VIEW ALL

View all

It said the complainant had completed claim documents sent to her by the administrator and "had incurred legal expenses in doing so, based on her reliance on the Misrepresentation".

The SCT determination said that while this initial "confusion" in dealing with the Complainant's eligibility to make an IP Cover claim, did not impact upon the substantive issue that was the subject of this complaint the Tribunal found that the Complainant did enter into a financial commitment for legal expenses in reliance on the misrepresentation.

"This misrepresentation was made after considerable review and analysis by the Trustee's Administrator and was reasonably relied upon by the Complainant to her financial detriment," the SCT determination said.

The Tribunal ordered that the fund compensate the member for the amount of the legal fees incurred in lodging the IP claim.