Less than a month after being ordered to pay $27 million for failing to merge duplicate member accounts, Australia’s biggest super fund is again the target of a suit launched by the corporate regulator.
ASIC announced on Wednesday, 12 March, it is suing AustralianSuper over delayed processing of nearly 7,000 death benefit claims.
The corporate regulator alleges between 1 July 2019 and 18 October 2024, AustralianSuper failed to process death benefit claims efficiently, honestly and fairly when it took between four months and four years from the date the claim form was returned to assess at least 6,897 death benefit claims.
ASIC also alleges AustralianSuper delayed paying benefits to at least 752 deceased members, with one case taking 1,140 days, and delayed providing claim forms in 254 cases by 15 to 213 days.
“At its heart, this matter is about protecting vulnerable Australians and their families,” said ASIC deputy chair, Sarah Court.
“It is vital that death benefit claims are processed in a timely manner. Delays are likely to cause further pain and anxiety to people who are already suffering from grief, making what is already a difficult time even harder.”
ASIC last year announced member service failures in the super sector remain an “enforcement priority” for the regulator. In November, the corporate regulator initiated civil penalty proceedings against United Super, the trustee of Cbus, alleging delays in processing death benefit and total and permanent disability claims affecting more than 10,000 members and claimants.
“It is the trustee’s responsibility to ensure sufficient resources are available to service members and claimants, and that adequate oversight of systems is maintained to deliver all services as promised to members. Accountability cannot be outsourced,” Court said.
“Our work on member services will continue with the release of our death benefits report in coming weeks.”
AustralianSuper was responsible for nearly a quarter of all complaints to the Australian Financial Complaints Authority (AFCA) about death benefits in 2022–23 and 2023–24. From 2021 to 2023, AFCA complaints about service-related issues relating to superannuation products roughly doubled.
Last month, the Federal Court of Australia ordered that AustralianSuper pay a pecuniary penalty of $27 million in respect of failures to merge multiple member accounts.
At the time, a spokesperson for AustralianSuper said the fund “regrets that its processes to identify and combine multiple accounts did not cover all instances of multiple member accounts”.
“This should not have happened, and we apologise unreservedly to members.”
AustraliaSuper moves processes in-house
In a written statement to InvestorDaily on Wednesday, a spokesperson for AustralianSuper said: “We are considering ASIC’s claim carefully and will respond on the substance of the claim in due course.”
The fund attributed death claim delays to increased member deaths and staffing shortages during COVID-19, prompting a backlog it sought to clear with a service provider before ultimately bringing processing in-house.
“Paying out members’ retirement savings after they die is the final service we provide them. 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,” it said.
“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. Bringing this function in-house strengthens our ability to deliver this important service efficiently and empathetically.”
The fund, it noted, is part way through a $120 million investment in service improvements, including bringing operations in-house that require high care and empathy.
“Since our in-house Bereavement Centre was launched in April 2024, with 75 dedicated case managers handling death claims from start to finish, we have seen a significant reduction in claim processing times,” the spokesperson said, adding the fund welcomes the regulator’s industry-wide attention on this matter.
