ASIC has sued TelstraSuper over its alleged failure to meet complaint handling requirements, marking the first litigation since the internal dispute resolution (IDR) regime became more enforceable.
The watchdog commenced proceedings in the Federal Court on Friday, claiming TelstraSuper did not respond or give required notification to 213 complaints, including the failure to respond to 106 complainants within the mandatory period of 45 days.
The fund also allegedly did not notify 85 complainants about delays in resolution and informing 22 about their right to complain to the Australian Financial Complaints Authority (AFCA).
ASIC deputy chair Sarah Court said financial services providers are expected to not only have the dispute resolution procedures, but also enough resources to put them into practice. “Financial service providers need to prioritise dispute resolution procedures to properly protect consumers,” Court said.
The regulator claimed that 40 per cent of TelstraSuper’s responses to complainants did not comply with the fund’s own dispute resolution process during a rough 15-month period beginning 22 October 2021 – shortly after the IDR scheme became partially enforceable.
“TelstraSuper understands that the complaints process can be distressing for some members,” a fund spokesperson said in a statement.
“We’re committed to providing members with a strong member experience – and that includes our complaints handling process. This matter is now the subject of ASIC proceedings so we’re unable to provide further details at this time.”
TelstraSuper, however, is not the only one under scrutiny. Earlier this year, ASIC found almost 20 per cent of super funds had consistently failed to respond to complaints within the required 45-day timeframe.
Meanwhile, AFCA’s yearly data snapshot indicated that 6,957 complaints were directed to the super sector in the 2023 financial year, up 32 per cent year-on-year (albeit at a slower pace than general insurance and investments/advice sectors).
Speaking at Investment Magazine Group Insurance Dialogue in July, ASIC commissioner Danielle Press said if service standards don’t improve in the regulated funds space, “people will lose confidence in the system”.
“Community expectations have shifted around what is expected from super funds these days and I don’t think we’ve stepped up and met those expectations,” she said at the time.
“I think there’s a risk that people will move out of the regulated system into the self-managed space.”