One of Australia’s largest superannuation funds has been fined $23.5 million (US$15.2 million) for unreasonable delays in processing insurance claims.
The Australian Securities and Investments Commission (ASIC) said United Super Pty Ltd, the trustee of the Construction and Building Unions Superannuation Fund (Cbus), had been ordered by the Federal Court to pay the penalty.
Cbus, which manages $105 billion of assets for more than 925,000 members, had admitted that serious failures caused delays in processing the death benefits and total and permanent disability (TPD) insurance claims of more than 7,000 Australians.
ASIC Deputy Chair Sarah Court said Cbus's failures needlessly exacerbated the distress of people who were already in upsetting situations.
“Thousands of Australians suffered real and avoidable harm because of long delays and systemic failures in the way Cbus handled important and sensitive insurance claims,” Court said in a media release.
“When people were grieving the loss of a loved one or grappling with a life-altering injury, Cbus should have ensured timely and accurate decisions were made on their insurance claims.
“Not only was Cbus aware of increased insurance claim volumes, but it was also put on notice by its own customers who were complaining about the long delays they were enduring.”
Between October 2022 and November 2024, Cbus outsourced its claims processing to Australian Administration Service Pty Limited (AAS).
“This outcome underscores a message to the whole industry to get it right, especially when your members need it most. You cannot outsource your obligations to your members,” Court said.
The penalty exceeds United Super’s $18.5 million in revenue in the 2024 financial year, and is in addition to the $32 million in compensation the fund is paying to the 7,402 claimants and members for lost earnings and wrongfully charged fees.
Cbus said it had paid compensation to almost all affected members, their families and claimants, and established reserves to pay the penalty, but administration fees had not been increased to cover the penalty.
“We want to again apologise to our members, families and claimants without reservation and promise to do better,” the fund said in a media release.
