The financial watchdog says the superannuation industry needs to do better after a review they undertook found that, in more than three-quarters of death benefit claims, super funds were responsible for delays caused by processing issues within their control.
Death benefits refer to the remaining superannuation balance in a member's account after they pass away, which a beneficiary — usually a family member — is entitled to be paid as soon as practicable.
What did ASIC's report find?
The Australian Securities and Investments Commission (ASIC) said poor customer service was rife among the 10 trustees they reviewed, which cover about 38 per cent of benefits held by funds regulated by the Australian Prudential Regulation Authority.
The trustees included a mix of retail, public sector and industry super funds, including Australian Retirement Trust and UniSuper. It did not include Cbus or AustralianSuper in its review because it has already initiated legal proceedings against them.
Excessive delays and poor service
ASIC found many examples of excessive delays and poor service. While timelines to respond to claims varied greatly between funds, none of them closed more than half of the claims within 90 days.
— Of the claim files ASIC reviewed, 78 per cent involved delays caused by processing issues within the trustee's control.
— Timeliness varied from Colonial First State trustee Avanteos, which closed approximately 48 per cent of death benefit claims in 90 days, to the slowest trustee, Rest, which closed only 8 per cent of claims in the same period of time.
— Instances of poor customer service were present in 27 per cent of claim files, including not returning claimants' phone calls, dismissing their queries and asking for unreasonable information.
— In one case, a trustee took over 500 days to pay a death benefit of around $100,000 to a First Nations woman grieving the loss of her husband.
What has ASIC said about the findings?
"Many of the complaints we read were distressing. We saw deep grief, vulnerability, frustration and genuine suffering." — Simone Constant, ASIC commissioner.
"The money from a death benefit can make a huge difference and each day a trustee delays that payment causes real harm to families."
What did ASIC recommend?
The report made 34 recommendations for funds to adopt. They focused on improving customer service and speeding up response times, better monitoring and reporting, streamlined claims processes, better staff training and removing barriers for First Nations claimants.
