Liberal senator Andrew Bragg has written to Financial Services Minister Stephen Jones asking that he prioritise the “serious misconduct” issues on the part of superannuation trustees.
“I am writing with regard to lengthy delays in super payouts to Australians after the deaths of their loved ones,” Mr Bragg wrote.
He noted that 377 complaints were made to the Australian Financial Complaints Authority (AFCA) in FY2022-23 from Australians who were experiencing these delays.
In addition, 1,400 complaints were made to AFCA in regard to group life insurance in the super sector over the same period.
“This misconduct is occurring right under the noses of the regulators,” Mr Bragg said.
Referencing AFCA data, he added that AustralianSuper alone made up over 23 per cent of all super death benefits complaints in FY22-23.
“Furthermore, AustralianSuper and TAL were the subject of 26 per cent of all group life insurance complaints to AFCA in the same financial year.”
At supplementary budget estimates last month, Mr Bragg raised this matter with Australian Securities and Investments Commission (ASIC) deputy chair Sarah Court.
Here, Ms Court identified the delay in payments by superannuation trustees as a “priority issue” for the regulator.
“We’re aware of these issues. We are aware that this has become an emerging theme of complaints through to AFCA in terms of the way that members’ claims are being processed, delays and the like,” she said.
As such, Mr Bragg has asked Minister Jones to provide a “timetable for action” so that Australians can access the “much-needed” benefits that they are entitled to from super funds.
“Given ASIC has a clear regulatory remit over superannuation trustees, notably their obligations to provide ‘efficient, honest and fair financial services’, I ask that you provide advice on what action is being taken to protect consumers from poor conduct from superannuation trustees with-respect-to delayed death benefits.”
The senator further pointed to ASIC and Mr Jones’ swiftness in executing anti-scam initiatives, jointly-announcing earlier this month that “20 dodgy websites” were being removed per day. Mr Bragg has called on the minister to extend the same aggressiveness towards this issue.
“Given your enthusiasm for anti-scams initiatives in collaboration with ASIC to protect Australians, I ask that you prioritise these serious misconduct issues on the part of superannuation trustees.”
Last month, the ombudsman also reported that the highest number of investment and advice complaints lodged in 2022–23 concerned inappropriate advice, rising to 1,662 from 241 in the year prior.
Overall, the number of complaints concerning the investments and advice sector was up 51 per cent, with consumers making 4,840 complaints, compared with 3,207 in the previous financial year.
AFCA did, however, highlight that a recent downward trend in complaints related to investment and advice products would have continued in 2022–23, if not for one-off surges in complaints relating to Dixon Advisory and Best Leader Markets.
I’m sorry to say, the skills / untrained personal in claims is a major problem.
I was involved with a case three years ago where the claim processor not only failed to attend two phone conferences, one which she arranged on a day she was not working. She also had no idea of how to cross off what was submitted and required, as on one of my calls she said she only needed one more doctor’s report.
When I challenged, her on why she was asking for three reports she had no idea she already had the two required.
I am also aware of the loss (resignations) of experienced staff.
I had a client who didnt believe in Estate Planning, so no BDBNs & no Will in place until a newsagency Will completed a week before they died. This was despite numerous requests to get the documentation done.
When one of them died, the delays this caused was lengthy. And naturally they blamed the super fund for the delay, accusing them of holding onto their money to gouge more fees…
The issue, as always,lies with individuals who dont turn their attention to their estate planning needs until someone is actually dead!! While this is rarer with advised clients, I can imagine the number of unadvised clients without effective BDBN’s & Wills would be huge.
I would imagine the issues were at similar levels when the Noalition was in power but like many things, they’ve only just realised they are a problem…
If TAL have >26% of the group insurance market (which they do), then having 26% of complaints means they must have a lower claim rate than average. #simplemaths
Perhaps the stat should include how many beneficiary nominations hadn’t been made…?
“Bragg takes aim at life insurance ‘poor conduct’ in penned letter to Jones”
Is IFA now reduced to a little tabloid news headlines. It’s not about life insurance per se, it’s about the behaviour of superannuation trustees of which Sen Bragg is complaining. A death claim is a death claim.
I suspect what he’s really saying is that trustees are taking ages to firstly process initial applications, and then organise the provision to the trustee of a certified copy of the death certificate, one of the will, details of the executors of the estate and of course a declaration of probate..
That always takes time but it doesn’t help when an industry fund loses the paperwork when it is submitted by the executor of the estate to the trustee. And the final problem will be the trustee slowing up the process of deciding who is a beneficiary where there is no binding death benefit nomination. And that’s probably most members of industry funds.
Of course QAR will solve all of this, won’t it?
Not entirely sure how to spin this, but those pesky advisers muct be to blame…somehow.