Superannuation fund members and their financial advisers need to rely on formal documentation from their funds and insurers rather than e-mails received from administrators.
That is the bottom line of a recent determination of the Superannuation Complaints Tribunal (SCT) which declined to uphold an insurance-related complaint from a member and his financial adviser that they had cancelled total and permanent disability (TPD) cover with an external insurer because they had received an erroneous e-mail from the fund’s administrator that the member was covered by the fund’s insurer.
The SCT’s determination held that while the member and his adviser had, indeed, received an erroneous e-mail from the administrator about TPD cover, they should not have cancelled the cover with the external insurer until they had received formal documentation from the superannuation fund or the insurer.
Further, it said that while the fund acknowledged that the member had received the erroneous e-mail, the mistake had been corrected within weeks and that the adviser should have been aware that his client’s medical condition was such that he was unlikely to have been granted the TPD cover by the fund’s insurer.
The SCT determination said that the complainant’s financial adviser was well aware of the complainant’s past medical history having handled his insurance cover for a number of years and that premium loadings had previously been applied in respect of the complainant’s death only cover and this, combined with the financial adviser’s knowledge of the complainant’s past medical history, should have made the financial adviser act with caution before cancelling any cover held outside of the fund.
“Any cover applied for within the fund, if accepted, is likely to have been accepted on substandard terms (or not accepted at all as was the eventual outcome) and as such, it would have been prudent to await advice from the Insurer (via the fund) as to whether or not cover had been formally accepted, and if so, on what terms,” the SCT determination said.
The SCT upheld the decision of the superannuation fund and the insurer to decline the TPD cover.
