)
The Construction and Building Unions Superannuation Fund (Cbus) is facing allegations that it cost more than 10,000 members $20 million for failures in processing death benefits and permanent disability claims over the past two years.
The Australian Securities and Investments Commission (ASIC) has launched Federal Court action against United Super, the trustee of Cbus, alleging that between September 2022 and November this year the industry super fund failed to act “efficiently, honestly and fairly” in the handling of these claims.
ASIC alleges that despite receiving reports from its third-party administrator, Australian Administration Services, United Super failed to properly assess the scale of the impact to members and claimants.
The corporate watchdog estimates that more than 10,000 members and claimants have been impacted by these delays which took more than 90 days to be processed and in many instances were held up for more than a year.
“Delays in claims processing like those alleged by ASIC cause real harm to families who may be relying on the payments to meet critical expenses,” says ASIC deputy chair Sarah Court.
“This adds to difficult personal circumstances, whether grieving for a loved one or dealing with severe injury or illness. The additional anxiety and pain these delays caused compounded the issues these members and their families faced.”
ASIC has alleged that by late 2022, more than 6,000 Cbus members and claimants had their payments delayed by more than 12 months.
“Extraordinarily, that equates to more than 50 per cent of Cbus’ total claims at that time,” says Court.
“We allege they are yet to completely rectify these issues. Trustees cannot outsource accountability when it comes to claims handling.
“It is the trustee's responsibility to ensure there is adequate oversight of their systems and to prioritise the resources necessary to deliver the services they have promised to their members.”
ASIC alleges that even when a response was undertaken by United Super in October 2022, this response was inadequate and insufficient to resolve the issue.
It is further alleged that despite the matter being brought to the attention of the Cbus Risk Committee between November 2022 and February 2023, the trustee of Cbus failed to report these issues to ASIC as required within 30 days of becoming aware of them.
ASIC also alleges that United Super failed to take all reasonable steps to ensure that when the matter was ultimately reported to ASIC in August 2023 and September 2023, those reports were not materially misleading when they reported the contravention was not ongoing, among other matters.
“We allege Cbus failed its members and claimants at their most vulnerable time, and we are taking this case to protect all those vulnerable Australians trying to access the financial support to which they are entitled,” says Court.
“The systemic failure by superannuation trustees to deliver essential member services in a timely manner is a key priority for ASIC and we will continue to take action to hold trustees to account.”
United Super self-reported the delays in processing claims to ASIC in August 2023.
Super Consumers Australia, which advocates for people on low and middle incomes in the superannuation system, has welcomed ASIC’s legal action against Cbus which it describes as a test case to determine if the law is “protecting people when they are most vulnerable”.
"Making a death benefit or TPD insurance claim is an incredibly stressful and critical moment in someone's life," says Susan Quinn, advocacy manager at Super Consumers Australia.
"Huge delays like the ones reported at Cbus double down on the anxiety and can force people to struggle with their day-to-day living costs and debts."
Quinn notes that there are no specific legal standards or timeframes for super funds handling their members' insurance claims.
"ASIC is alleging Cbus breached a very broad legal duty here,” she says.
“That ambiguity doesn't give comfort or certainty to people at the toughest times of their lives.
“There’s a clear lack of leadership in the super sector on this widespread problem. We are now calling on the Government to mandate standards for super funds' member services like claims handling.”
Super Consumers Australia reveals that regulators have been collecting data on how individual super funds are handling insurance claims but it says that this data has not been made public.
"People have no idea which funds are better than others when it comes to insurance claims and disputes,” says Quinn.
"Mandatory standards plus public accountability are the only way to stop the distressing experiences we hear about so often.”
)
