AustralianSuper charged dead people account fees, ASIC alleges
AustralianSuper charged dead people account fees and had excessive delays in paying out claims, the corporate regulator alleges.
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The $355bn AustralianSuper industry fund has been accused of charging dead people account fees amid excessive delays in paying out their claims, the corporate regulator alleged.
Details about the superannuation fund’s alleged conduct comes after the Australian Securities and Investments Commission revealed it was suing the company in March, having claimed it took between four months and four years to assess 6897 death benefit claims in the five years to October 2024.
ASIC’s full statement of claim revealed the corporate cop argued that, despite a “death claims backlog”, AustralianSuper continued charging monthly administration fees from deceased members’ accounts during periods of unreasonable delay.
An AustralianSuper spokesman said: “AustralianSuper will file a detailed defence in accordance with the court’s timeline. Before doing so, we’ll be asking ASIC to provide more detail on some aspects of their claim that are unclear to us.
“Paying out members’ retirement savings and benefits when they die is one of the most important services we provide, and the fund has taken and will continue to take major steps to significantly improve managing death claims for beneficiaries.
“Previously, when a member passed away, administration fees were charged to provide the service of continuing to manage and administer their account. Since October last year, once the fund is notified of a member’s death, our policy is that their account is invested in the fund’s cash option and administration fees are no longer charged.”
According to the court documents, about $4.2m has been paid out to beneficiaries through a remediation program stood up to compensate victims.
AustralianSuper outsourced claims handling to Link in June 2019, and once a claim was accepted and referred for payment it should have been paid to beneficiaries within five business days.
But from May 2020, delays started to mount in the processing of death benefit claims at Link.
A series of “recovery plans” were formalised, but timelines to get claims handling back on track kept blowing out, court documents alleged.
The delays were reported to the AustralianSuper board from November 2020, ASIC said.
In about May 2021, an updated plan emerged, according to ASIC.
“This recovery plan revised the previous forecast to return death claims processing to normal service levels. At this time AustralianSuper stated that it was ‘confident work will be within service expectations by early June 2021’,” ASIC said.
“Between May 2021 and April 2022, the forecast to return death claims processing to within service levels was revised several times.
“A report dated October 8, 2021 was provided to the AustralianSuper board, which stated that the initial target to be within service expectations by early June 2021 did not eventuate … The expectation is that the team will be within service standards by early November 2021.”
But an update shared with an AustralianSuper committee in November 2021 said the new target “did not eventuate” because a high proportion of the team were new.
By March 2022, member complaints were increasing, and between July 2019 and July 2022, membership grew by 26 per cent.
And by October 2022, there were about 4658 death benefit claims in the backlog.
ASIC deputy chair Sarah Court has previously said the regulator was sending a message to funds that “you need to ensure, first and foremost, to look after your members”.
The lawsuit against AustralianSuper comes after the corporate cop took similar action against the $94bn construction industry super fund Cbus late last year for allegedly taking too long to pay out legitimate death and total disability payments.
AustralianSuper was fined $27m this year for failing to merge duplicate accounts held by more than 90,000 members over a nine-year period.
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