Super funds are unlikely to get a reprieve from regulatory scrutiny of insurance claims handling and systems uplift, with ASIC commissioner Simone Constant saying that the corporate cop “is not done with death benefits” and that the success of superannuation should be measured by the quality of its services, not just the size of its assets under management.
“We will continue to follow up and follow through to ensure trustees do what they have said they will do and deliver that step-change that has been promised,” Constant said in a keynote speech to the Law Council of Australia in Adelaide on Wednesday night.
ASIC’s March report into death benefit claims handling delivered 34 recommendations to the industry on how to improve practices, including the introduction of streamlined processes and procedures and better guidance and training for staff. But a “golden thread” that runs through claims handling issues relates to failures in monitoring and responsibility at board level.
“[There] seems to be a disconnect between what’s happening in the boardroom and in the bullpen,” Constant said.
“When I talk to trustees, they always say that their organisation works for the best outcomes for their members. But my first question to them is: how do you know? How are you measuring that? What data are you using? What are you doing with your complaints data? And when things go wrong, what question didn’t you ask?”
Constant said that it “speaks volumes that not one trustee in [ASIC’s] review tracked their claims handling times from start to finish”.
“It’s no wonder that some of them were shocked when we showed them their processing times.”
ASIC’s review followed high-profile death benefit claims handling failures at the likes of Cbus and AustralianSuper, both of which are now before the court. But Constant also took aim at funds’ oversight of other outsourced service providers, saying that ASIC had warned trustees that they were too reliant on their administrators’ anti-scam and anti-fraud protections in the lead-up to cyberattacks that saw close to a million dollars stolen from the accounts of retired AustralianSuper members and the accounts of thousands of members across multiple funds compromised.
“To do their jobs effectively, trustees need the right data and the right insights – and they need it regardless of whether their services are delivered in-house or outsourced,” Constant said.
“Without it, how can they say, hand on heart, that they’re meeting their obligations?”
Funds began lifting their standards across member services and claims handling prior to the release of ASIC’s review, with Constant saying that there were already “promising signs” from the industry but warning funds that they still had more work to do.
“The feedback from industry has been promising,” Constant said. “Even as our review was ongoing, it prompted many trustees to improve their practices and complaints were falling.”
“(People) trust that their money is in safe hands. Trust that their money will be there for them when they need it. And trust that their money will look after the people they love if they’re not around to enjoy it. Every time a partner has to plead for basic information, or a parent has to resubmit documentation, that trust is eroded.”
