A report published on Monday by ASIC reveals the depth and breadth of the claims handling issues plaguing the superannuation industry and lays out 34 recommendations for trustees to improve their services.
Until recently, it has only been possible to glean the nature of super funds’ member services problem from vague industry scuttlebutt and one-star Google Reviews.
ASIC actions against AustralianSuper and Cbus, and the forensic court judgements that have accompanied them, have gone some way to revealing the widespread and deep-rooted nature of the problem. But ASIC’s new report lay bare its scale – and show just how much work funds will have to do to fix it.
ASIC says the report – Taking ownership of death benefits: How trustees can deliver outcomes Australians deserve – demonstrates “the devastating impacts that poor industry practices can have on grieving Australians”, identifies issues including excessive delays, poor customer service and ineffective claims handling procedures.
Three figures in the report stand out. The first is “zero” – as in, zero trustees covered in ASIC’s review monitored or reported on end-to-end death benefit claims handling times. The second is 27 – the percentage of claims files reviewed involving poor customer service, calls that weren’t returned, or queries that were dismissed. And the last is 8 per cent vs 48 per cent: the difference in claims closed in 90 days between the slowest (Rest) and the fastest trustee (Avanteos/Colonial First State).
“At the heart of this issue is leadership that doesn’t have a grip on the fund’s data, systems and processes – and ultimately it is the customers who suffer for it,” said ASIC chair Joe Longo.
“This kind of disconnect is unacceptable in any area of corporate Australia, but in the superannuation sector it is particularly serious, because super affects everyone from
the boardroom to the living room.”
For those that have been following ASIC’s actions against Cbus and AustralianSuper, Longo’s conclusion won’t come as a surprise. In multiple cases there seems to have been nobody at the wheel, and when they finally did reach out and grasp it they seemed unsure of which way to turn.
Cbus knew that there were “inordinate delays affecting thousands of members and claimants” but failed to take effective action to prevent or reduce losses, then failed to lodge a “reportable situation” report with ASIC and then had to clarify that report, which “contained statements making the report and clarification false or misleading”.
AustralianSuper took a similarly lackadaisical approach to correcting the failures in its own claims handling process, with senior executives allegedly aware of the problem up to a year before they outlined their concerns to Link Group, their administrator.
In its report, ASIC saw no robust reporting to trustee boards about death benefit claims handling times, and in particular on aged claims. It generally observed that more granular data was only presented to trustee boards after major issues with claims handling had already been identified.
“Grieving Australians should not have to suffer further stress because of the failure of superannuation trustees to approach claims in a timely, clear, and respectful manner,” said ASIC commissioner Simone Constant. “Trustees have not put in place meaningful performance objectives, tracking or reporting, and have failed to approach claims handling with consumers front of mind.”
ASIC’s review straddled the retail, profit-to-member and government fund space, including the likes of Australian Retirement Trust, Hostplus, Commonwealth Superannuation Corporation, Colonial First State and MLC. Nobody comes out looking particularly good; of the claim files ASIC reviewed, nearly 80 per cent had delays caused by processing issues within the trustee’s control, though trustees that processed claims internally or with a related-party service provider did tend to close claims faster than those that didn’t.
ASIC found instances of staff asking claimants to provide documents that the trustee already had – like death certificates – taking months to identify that documentation was insufficient, giving incorrect information about where death benefit payments could be transferred and telling claimants it had been transferred when it hadn’t.
But while all trustees are making efforts to improve the quality of their claims data and performance monitoring, there’s another figure in the ASIC report that trustees will have to come to grips with as they try to solve this problem: 34. That’s the number of actions the regulator says funds can take to improve claims handling practices, from the setting and monitoring of performance objectives to improving oversight of service providers and the quality of reporting to trustee boards. In its number one recommendation, ASIC says that trustee executives should “periodically read verbatim complaints” to understand members’ experiences when engaging with their fund.
After all, that’s what ASIC did.
“Many of the complaints we read were distressing,” Constant did. “We saw deep grief, vulnerability, frustration and genuine suffering.”
