Corporate cop enters into mediation with embattled Cbus

The corporate regulator will enter into mediation with Cbus, avoiding a potentially protracted courtroom showdown that would have put the embattled superannuation fund under further scrutiny for failing to process the insurance claims of thousands of disabled and bereaved members in a timely manner.

The Australian Securities and Investments Commission told the Federal Court it was prepared to enter into early mediation with the $100 billion fund, given Cbus had conceded on “significant aspects” of its case, according to documents obtained by this masthead.

The corporate regulator will enter into mediation with Cbus, chaired by Wayne Swan, avoiding a potentially protracted courtroom showdown. Credit: Paul Harris

Last November, Cbus chief executive Kristian Fok apologised to 10,000 members whose death and disability claims were “unacceptably” delayed since August 2022, with the vast majority not resolved for more than a year. The fund had urged ASIC to “engage in alternative dispute-resolution processes” to avoid a legal trial.

“ASIC submits that the combination of the overlap between the contents of the defendant’s own statutory breach reports and ASIC’s claims; together with the defendant’s publicly stated desire to avoid protracted litigation … indicates that this proceeding could be resolved at an early stage,” ASIC filed in court on the eve of the case management hearing last month.

“To facilitate that, ASIC proposes an early mediation following the defendant serving a concise response … If, however, despite the defendant’s publicly stated position, it wishes to defend the matter in a more protracted manner because it disputes ASIC’s allegations, ASIC’s proposed orders also provide for ASIC to put on a statement of claim to which the defendant can respond with its defence.”

Justice David O’Callaghan last month ordered the regulator and fund into mediation, with the mediator to report to the Federal Court by June 30 on whether the matter had been finalised.

The regulator has alleged the trustee of Cbus, “a very large industry superfund”, failed to do all things necessary to ensure that it provided its financial services efficiently between at least September 2022 and November 12, 2024.

ASIC has argued Cbus did not process death and disability claims within a reasonable time; did not properly assess the scale of the delays; failed to take appropriate action to reduce the delays; and did not properly identify the risks that its claims-handling system posed to members.

An ASIC spokesman said the regulator, as a responsible litigant, had agreed to enter into mediation.

“Mediation is a typical part of the court process which may assist in narrowing the contested issues,” the spokesman said. “They are commonly held ahead of a matter being finally determined by the court. ASIC remains committed to ensuring Cbus is held to account for the various failings alleged in ASIC’s concise statement.”

Liberal MP Andrew Bragg, who has been rallying against Cbus over a suite of corporate governance scandals, said the fund’s victims deserved to understand exactly what had led to their claims being delayed.

“It’s clear from [Cbus chair Wayne] Swan and [board member John] Edwards’ testimony to the Senate, there are massive competency issues here, and I think these need to be addressed and not swept under the carpet,” Bragg said.

Cbus was contacted for comment.

But in an affidavit filed with the Federal Court last month, lawyers acting for the fund said Cbus had published a media statement on its website following ASIC’s court action which said it was “sorry that delays have been experienced in the processing of insurance claims”, and that it “apologises to our affected members and their families without reservation and promises to do better”.

In an interview with The Australian last week, Swan said more than 90 per cent of the outstanding claims had been paid out, with the remaining being worked through as a priority as the fund seeks more details from members.

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