InvestorDaily understands the corporate regulator has filed proceedings against Cbus Super on insurance claim delays.
In a statement issued by the fund, Cbus said it is “sorry” that delays have been experienced in the processing of insurance claims made by its members.
“Regrettably, this has added to the distress of members and their families,” the fund said.
“We apologise to our affected members and their families without reservation and promise to do better.”
In a statement issued late on Tuesday, the regulator confirmed it has filed civil penalty proceedings against United Super, the trustee of Cbus, for failing to process over 10,000 claims for death and total permanent disability (TPD) benefits in a timely manner, impacting more than 6,500 members.
The regulator alleged that the delays, which spanned more than 12 months for some claimants, resulted in an estimated $20 million in financial losses for members, with the Australian Securities and Investments Commission (ASIC) accusing the trustee of inadequate response and misleading reports regarding the ongoing issues.
ASIC deputy chair Sarah Court said: “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.
“By late 2022, more than 6,000 Cbus members and claimants had their payments delayed by more than 12 months. Extraordinarily, that equates to more than 50 per cent of Cbus’ total claims at that time. We allege they are yet to completely rectify these issues,” Court said.
Moreover, in its statement, the regulator alleged that despite the issue being raised with the Cbus Risk Committee between November 2022 and February 2023, the trustee failed to report the matter to ASIC within the required 30-day period.
Finally, it added that United Super failed to take all reasonable steps to ensure that when the matter was ultimately reported to ASIC in August 2023 and September 2023, those reports were not materially misleading when they reported the contravention was not ongoing, among other matters.
“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.
“The systemic failure by superannuation trustees to deliver essential member services in a timely manner is a key priority for ASIC and we will continue to take action to hold trustees to account.”
According to the fund itself, Cbus has implemented a number of measures that are reducing delays and is committed to further improving management of insurance claims.
“Cbus has established a compensation program for affected members which is being implemented now,” it said.
The fund stressed it is cooperating with ASIC during its investigation.
“Cbus will invite ASIC to engage in alternative dispute resolution processes to avoid protracted litigation,” it said.
Earlier this year, the prudential regulator imposed additional licence conditions on the trustee of Cbus in response to concerns regarding serious misconduct within the Construction, Forestry and Maritime Employees Union (CFMEU).
Citing public allegations of serious misconduct within the CFMEU and subsequent steps taken by governments and the Fair Work Commission, the Australian Prudential Regulation Authority said at the time it “is concerned about the potential impact on trustees”.
Cbus may not attend Senate inquiry, says Bragg
Also on Tuesday, Senator Andrew Bragg told Sky News that Cbus has yet to confirm its attendance at the Senate inquiry into superannuation savings taking place this week.
The inquiry, looking into consumer experiences, choice and outcomes in Australia’s retirement system, is taking place on Thursday, however, according to Bragg, Cbus, which is chaired by Wayne Swan, doesn’t want to confirm their appearance.
“The reason that I think it’s important they come is because the Housing Australia Future Fund is a centrepiece of Labor’s housing policy. And the one big super fund, which has committed members’ money, which is Cbus, has actually said that they would put in $500 million into this Housing Australia Future Fund. So, the idea that they wouldn’t come and give evidence, I think, is very concerning,” Bragg said.
He also hinted that the Senate may compel Cbus to attend.
“We do have a range of powers at our disposal, but that’s subject to the agreement of Senate colleagues. Those discussions are happening as we speak,” he said.
“If it’s good enough for Qantas and good enough for PwC to be forced effectively to turn up and to engage with the Parliament, I think it’s very important that we maintain that principle because we are looking into matters of great public interest here. There is the CFMEU overlay, but there’s also the fact that this fund is seeking access to taxpayer funds through the crazy boondoggle Housing Australia Future Fund.”
Personally I’ve found CBUS to be better than most industry funds with insurance. I always put that down to the CFMEU members on the board.