Super giant apologises for ‘unacceptable’ insurance delays

The boss of $94 billion superannuation giant Cbus has publicly apologised to 10,000 members whose death and disability claims were “unacceptably” delayed as the financial regulator puts the fund’s governance under the microscope.

Appearing before a Senate inquiry on Thursday morning, Cbus chief executive Kristian Fok was grilled on a litany of scandals engulfing the embattled fund, including its links to the disgraced construction union and a Federal Court action against its handling of insurance claims.

CEO of Cbus Super Kristian Fok appears via video link during a public hearing of a Senate committee on Thursday morning. Credit: AAPIMAGE

Fok blamed high staff turnover at Link, the third-party administrator to which it outsourced claims handling, for 10,000 members waiting more than three months for their applications to be assessed. Most of them not were resolved for more than a year.

“The delays are unacceptable, but we’re not withholding money, absolutely none at all,” Fok said.

“The delays, as I indicated, have primarily emanated from our administrator. We are still responsible for it. We need to ensure as best as we can that we can rectify it, and we have been doing that. We had experience with the administrator, a large amount of turnover, and need to uplift on training.

“There’s been quite a lot of actions we’ve had to instigate.”

The Australian Securities and Investments Commission is suing Cbus over allegations the fund failed to identify and prevent delays that have affected thousands of people since August 2022.

In documents filed with the Federal Court, ASIC acknowledged the claims-handling had been outsourced to the troubled Link, but alleged Cbus failed to take several steps under its contract with the company to rectify the delays. It also said the ultimate responsibility was with the fund.

Fok told the committee 80 per cent of claims subject to the litigation had so far been resolved, with $755 million in benefits paid out.

The Senate committee also heard from the Australian Prudential and Regulation Authority, which has ordered Cbus to commission an independent review of whether three directors linked to the disgraced construction union, the CFMEU, had been fit to sit on the fund’s board and whether they had acted in the best financial interest of members.

APRA executive director of superannuation, Carmen Beverly-Smith, said she could not comment on the review it had ordered, but it planned “for that to be completed in the near term rather than the long term”. That governance review will be released publicly.

Cbus chief executive Kristian Fok.Credit: Natalie Boog

The regulator’s general counsel, Lucinda McCann, added that APRA had been undertaking a review of its existing governance standards across all the industries it supervised and would release a discussion paper with proposals in coming weeks.

Committee chair and Liberal MP Andrew Bragg grilled both APRA and Fok on Cbus’ relationship with the CFMEU, which was placed into administration after this masthead published allegations of corruption and criminal infiltration of the union.

The super fund paid about $1 million to the CFMEU last year, according to newly released data by APRA, and has had three CFMEU members on its board. The administrator has nominated three directors to the board – Paddy Crumlin, Jason O’Mara and Lucy Weber – who are yet to be endorsed.

“We have been in contact with [the administrator], given that they are now responsible for the nomination of directors, but of course, trustee director nominations … put forward by the administrator are very much a matter for them,” McCann said. “We don’t have a specific role in approving or disapproving of individual director appointments.”

Committee chair Andrew Bragg Credit: Oscar Colman

Earlier, when Fok was asked whether he believed the CFMEU-linked directors were fit to be on the board of Cbus, he said that was a matter for the current directors.

He also said he would await the findings of the APRA-ordered review to determine whether Cbus would continue paying the union money, but that the fund believed “there is incredible value with that relationship”.

“We will take into account any findings that come from the independent review, but we will make commercial decisions across any partnership activity, and if we think that continues to be a value driver, we would expect that it would be something that we would continue to pursue,” Fok said.

Bragg asked Fok why the fund’s chairman, former federal treasurer Wayne Swan, publicly declared Cbus could invest more than $500 million in the Housing Australia Future Fund. The Cbus chief said Swan had made those public comments because he was given an opportunity.

“It’s alongside the strategy that has been agreed, and again, it was all subject to finding opportunities that meet our requirements,” Fok said. “As a growing fund, one of the things that we can derive a lot of benefit from is getting early access to opportunities.”

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