Industry super fund Cbus pushes back against ASIC claims it mishandled death, disability claims
The $100bn superannuation fund chaired by Labor president Wayne Swan has revealed its defence against ASIC’s claims it mishandled $20m worth of death and disability payouts.
One of Australia’s biggest superannuation funds, Cbus, has called serious allegations its board knew about a substantial increase in death and disability payout complaints but failed to do anything about them “vague and embarrassing”.
The Wayne Swan-chaired superannuation fund which manages more than $100bn has fired back against a blockbuster lawsuit launched by the corporate cop late last year which included claims Cbus board committees met and knew the fund was “receiving a substantial increase in death and TPD (total permanent disability) claim volumes and administration complaints” between November 2021 and May 2023.
But, in response, Cbus described that allegation as legally vague and embarrassing showing the powerful fund will be pushing back against the Australian Securities and Investments Commission Federal Court case.
“The allegations are vague and embarrassing insofar as they fail to identify precisely what was noted at each of the relevant Board committee meetings,” Cbus said in its defence.
Cbus further called the allegation vague and embarrassing because the regulator did not define exactly what a substantial increase in complaints meant.
A Cbus spokesman told The Australian it will be pushing to avoid a lengthy court fight.
“Cbus is continuing to co-operate with ASIC during this legal process and remains committed to an alternative dispute resolution to avoid protracted litigation,” he said.
The super fund also rejected ASIC’s claim it failed to do anything to improve claims handling under an outsourcing agreement with Australian Administration Services (AAS), “in a manner that would reasonably be expected to materially ameliorate the delays in processing death and TPD benefits claims”.
“(Cbus) denies paragraph 40 and says further that … the trustee had measures in place, and took steps to, identify, manage, address and prevent further delays in processing death and TPD benefits claims,” Cbus said in its defence.
Monthly meetings were held with AAS after they supplied Cbus with monthly service level reports, so Cbus could support the company to restore its performance.
Cbus also said it increased the frequency of these meetings between May 2022 and August 2023 as needed, and even supplied its own staff “to assist AAS with addressing the delays in the processing of insurance claims”.
As well, Cbus said it provided training to AAS staff between mid-2023 and November 2024 relating to death and disability claims processing.
ASIC has alleged the fund and its board are ultimately responsible for mishandling $20m in insurance money, and claimed in some cases it took more than one year to pay out death or disability payments.
Cbus outsourced some of its claims handling, including death and permanent disability, to AAS in December 2020.
In a full statement of claim, released by ASIC in May, the regulator said Cbus’s committees simply noted “additional resources had been assigned to deal with the increase in claims and complaint responses, but further action was not required”.
In its defence, obtained by The Australian on Monday, Cbus said its own insurer TAL was actively managing the very significant increase in claim volumes in May to September 2021 and additional resources had been provided to respond to the increase.
Cbus said an interim risk report for the quarter ended September 30, 2021 noted “an increase in administration complaints over the quarter appearing to relate to service and delay of benefits and that additional resources had been assigned to deal with complaint responses”.
It went further to say that in November 2021, the trustee risk committee noted during a meeting as a result of a significant uplift in claims handling, “insurance related complaints had decreased”.
Cbus agreed there was an increase in complaints one year later in November 2022, but that was primarily driven by a merger with Media Super and the introduction of new guidance demanding financial firms have a dispute resolution system.
It also admitted a later risk report from February 2023 recorded a “spike” in complaints related to insurance claim delays and service attributed to the remediation plans put in place to clear the backlog of claims.
The fund said a “claims re-engineering plan”, proposed by AAS, was effective in reducing the claims backlog.
“By January 2023, there had been a 28 per cent reduction in open claims held by Cbus,” the fund said in their defence.
Cbus admitted the trustee knew AAS failed to meet some of its service levels by May 2023 and that it was continuing to work through a backlog of claims.
As well, Cbus admitted its trustee — governed by a board of 14 directors, six of whom are trade unionists — “knew that AAS had failed to process some incoming death and TPD benefit claims within a reasonable period of time”.
It denied a claim that the risk committee in August 2023 knew Cbus did not act efficiently to process claims.
ASIC will now have an opportunity to reply to the Cbus defence, and a further court date is yet to be confirmed for the case.
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