One of Australia’s largest superannuation funds has been accused by the country’s corporate regulator of mishandling the processing of insurance claims which cost vulnerable members A$20 million.
More than 10,000 members and claimants of the Construction and Building Unions Superannuation Fund (Cbus) were affected by death benefits and total and permanent disability (TPD) insurance claims taking more than 90 days to be processed, the Australian Securities and Investments Commission (ASIC) said.
In documents lodged in the Federal Court on 12 November, ASIC alleged that from September 2022 to November 2024, Cbus’ trustee United Super Pty Ltd failed to act efficiently, honestly and fairly in handling death benefits and TPD insurance claims.
Cbus, which manages $94 billion of retirement savings (pension) for more than 900,000 members, advertises widely on television about the high returns it has generated for its hard-working members, who are mainly in the building industry.
ASIC Deputy Chair Sarah Court said more than 6,000 Cbus members and claimants had their payments delayed by more than 12 months by late 2022, equating to more than 50% of claims at that time, and it had yet to completely rectify these issues.
“We allege Cbus failed its members and claimants at their most vulnerable time, and we are taking this case to protect all those vulnerable Australians trying to access the financial support to which they are entitled,” Court said in a statement.
“Delays in claims processing like those alleged by ASIC cause real harm to families who may be relying on the payments to meet critical expenses.
“This adds to difficult personal circumstances, whether grieving for a loved one or dealing with severe injury or illness. The additional anxiety and pain these delays caused compounded the issues these members and their families faced.”
Cbus said it had been cooperating with ASIC and would invite the regulator to engage in alternative dispute resolution processes to avoid protracted litigation.
“Cbus Super is sorry that delays have been experienced in the processing of insurance claims made by our members. Regrettably this has added to the distress of members and their families,” the super fund said in a statement.
Cbus had established a compensation program for members which was being implemented now and was committed to improving management of insurance claims.