More than 10,000 members and claimants of the Construction and Building Unions Superannuation Fund (Cbus) were impacted by death benefits and total and permanent disability (TPD) insurance claims taking more than 90 days to be processed, according to allegations contained in documents lodged by ASIC in the Federal Court today.
The civil penalty proceedings filed by ASIC against United Super Pty Ltd (United Super), the trustee of Cbus, allege that from September 2022 to November 2024, it failed to act efficiently, honestly and fairly in the handling of claims for death benefits and TPD insurance.
ASIC alleges that despite receiving reports from its third-party administrator, Australian Administration Services Pty Limited, United Super failed to properly assess the scale of the impact to members and claimants. The financial loss has been estimated by Cbus to be $20 million to members and claimants.
ASIC Deputy Chair Sarah Court said, 'Delays in claims processing like those alleged by ASIC cause real harm to families who may be relying on the payments to meet critical expenses. This adds to difficult personal circumstances, whether grieving for a loved one or dealing with severe injury or illness. The additional anxiety and pain these delays caused compounded the issues these members and their families faced.
'By late 2022, more than 6,000 Cbus members and claimants had their payments delayed by more than 12 months. Extraordinarily, that equates to more than 50% of Cbus' total claims at that time. We allege they are yet to completely rectify these issues.'
'Trustees cannot outsource accountability when it comes to claims handling. It is the trustee's responsibility to ensure there is adequate oversight of their systems and to prioritise the resources necessary to deliver the services they have promised to their members.'
ASIC alleges that even when a response was undertaken by United Super in October 2022, this response was inadequate and insufficient to resolve the issue.
It is further alleged that despite the matter being brought to the attention of the Cbus Risk Committee between November 2022 and February 2023, the trustee of Cbus failed to report these issues to ASIC as required within 30 days of becoming aware of them.
Finally, ASIC alleges that United Super failed to take all reasonable steps to ensure that when the matter was ultimately reported to ASIC in August 2023 and September 2023, those reports were not materially misleading when they reported the contravention was not ongoing, among other matters.
'We allege Cbus failed its members and claimants at their most vulnerable time, and we are taking this case to protect all those vulnerable Australians trying to access the financial support to which they are entitled. The systemic failure by superannuation trustees to deliver essential member services in a timely manner is a key priority for ASIC and we will continue to take action to hold trustees to account,' Ms Court said.
ASIC alleges that Cbus may have contravened the following provisions of the Corporations Act:
- ss 912A(1)(a) & (5A) by failing to act efficiently, honestly and fairly in the handling of its members' claims for death benefit payments and TPD insurance payments;
- section 912DAA(1) and (7) for failing to lodge a reportable situation report within 30 days of becoming aware of a reportable situation; and
- Section 1308(5) for failing to take reasonable steps to ensure the breach report lodged on 5 August 2023 was not false or misleading in a material particular.
ASIC is seeking penalties, declarations, adverse publicity orders and orders for compliance matters to be implemented.
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Background
United Super is the trustee for one of Australia's largest industry superannuation funds, the Construction and Building Unions Superannuation Fund (Cbus).
MUFG Pension & Market Services Holdings Limited, is a provider of services in Australia's superannuation administration industry. It operates through its subsidiaries, including Australian Administration Services Pty Limited ACN 003 429 114 (AAS), which offers administrative services to United Super.
Since 1 January 2021, United Super has been authorised under its Australian Financial Services licence to provide trustee services, including the handling of claims for Cbus Superannuation Fund.
In 2021, United Super engaged AAS under an administration agreement to provide claims handling administration services with respect to Cbus. Those services included communicating with members, obtaining required documentary material and delivering this material to the Trustee and/or Insurer as the case may be.
United Super self-reported the delays in processing claims to ASIC in August 2023.
Complaints to AFCA about delays in claims handling by superannuation funds more than doubled between the 2022 and 2023 calendar years. Complaints about processing death benefit claims tripled over the same period.
ASIC's Moneysmart website features information that supports Australians in making decisions about insurance. Most super funds offer life, total permanent disability (TPD) and income protection insurance for their members. Find out more about how life insurance works and insurance through super.
