Superannuation payout problems ‘broader than Cbus’, ASIC warns

Australia’s corporate watchdog says mishandling of super payouts is a ‘broader industry issue’ as it tackles an industry ‘deep dive’.

ASIC alleges Cbus has mishandled $20m worth of death and disability claims

Australia’s corporate watchdog is eyeing the superannuation industry and suspects massive delays to awarding payouts is broader than its case against the CFMEU-linked Cbus.

Corporate cop deputy chair Sarah Court said the Australian Securities & Investments Commission is doing a “deep dive surveillance” of super trustees, after alleging on Tuesday Cbus mishandled $20m worth of death and disability claims.

It alleged in some cases it took more than a year to make payments to grieving families and people with disabilities.

“I think it’s fair to say that we do think this is a broader industry issue. So we are, at the moment, doing a deep dive surveillance of superannuation trustees’s handling of death benefits claims,” she said.

“More broadly, we are going to be writing to the CEOs of superannuation trustees shortly to really put them on notice as to what we are seeing and our concerns about that.

“We’re going to be putting out a detailed report early in the new year that really sets out the work that we are doing.”

Ms Court declined to comment about whether or not Labor Party President Wayne Swan should be held accountable for the allegations as he was and remains chairman of the $92bn fund.

She stressed that at this stage, Cbus is facing only allegations but if they proved in court penalties could be significant.

“What I can say is that the if ASICs case is made out, if these claims are established, then very significant maximum penalties are available,” she said.

Ms Court said the case is the first brought by ASIC in relation to delays on death and disability payments.

“We are deeply concerned about this area, and we’re deeply concerned for two reasons,” she said.

“Firstly, this is superannuation members money that superannuation trustees have stewardship of.

“When superannuation members suffer significant and distressing life events, whether it be the death of a loved one, whether it be that they’ve suffered a profound illness or injury, what they need to get from their superannuation trustee is immediate processing and attention to their entitlements.

“They have good membership with that fund. The fund owes them particular obligations.”

ASIC will allege in court that Cbus did not take appropriate action when it was warned about the massive failures – covering up to 10,000 claims – and that people to this day may be waiting for payouts.

All of Cbus’s alleged failures ­occurred under Mr Swan’s watch, leading to questions about how the former federal treasurer and mentor of Jim Chalmers allowed the scandal to occur.

Despite concern over how the matter would be weaponised by the Coalition, Labor MPs said the scandal did not necessitate Mr Swan standing down as the party’s president, a role he has held since 2018.

The charges are another headache for the multibillion-dollar super fund, which has already been dogged for months over its links to the Construction Forestry and Maritime Employees Union and its ousted militant leadership.

Labor sources on Tuesday night were wary over how the breaches by Cbus would impact Mr Swan and the Labor Party. “I’d be looking at what something like a Senate economics committee does with it,” one Labor MP said.

Shadow Treasurer Angus Taylor on Wednesday said financial regulator ASIC’s prosecution of Cbus Super for failing to put members’ interests first highlights the urgent need for “better governance” over the trillions of dollars Australians have in retirement savings.

Mr Taylor said the allegations were serious.

“This is a critical failure from an industry which regularly lobbies to put more restrictions on how Australians can access their own retirement savings,” Mr Taylor said.

“Given the prosecutions are now coming from both regulators, Labor has serious questions to answer about why it’s failing to take further action to secure Australians retirement savings.”

Opposition assistant spokesman for home ownership Andrew Bragg has challenged Cbus to appear before a Senate committee for questioning following ASIC’s allegation that the superannuation fund mishandled $20m in insurance money owed to grieving families and people with disabilities.

Senator Bragg said “government agencies and multiple super funds” have said they would attend a Senate Economics Committee hearing about housing issues but Cbus had not provided confirmation.

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Originally published as Superannuation payout problems ‘broader than Cbus’, ASIC warns