Speaking to the Australian Institute of Superannuation Trustees (AIST) Super Risk Symposium, Jane Eccleston, ASIC senior executive leader of superannuation, said the regulator had identified a lack of, or misleading information about the impacts of early release on insurance and eligibility.
Trustees are expected to communicate with members about any loss of insurance as a result of withdrawing under the scheme, particularly when they have cleared out their accounts.
“Several funds have struggled for instance to provide accurate information about the impacts on low balance and inactive accounts,” she said.
“ASIC has published an FAQ which sets out our expectations, that trustees communicate in a clear and balanced way to the members about how accessing early release may affect insurance cover and the options that members have if their insurance cover is lost. For some, this means [personal] communication about [the] loss of insurance.”
The regulator has indicated it will be monitoring the impact of COVID-19 on insurance offerings from trustees – with a report about super and insurance outcomes for consumers expected to be published in December.
Insurance and super have been an issue of interest for the regulator, after it indicated concern last year around the potential for poor consumer outcomes arising from ADL (activities of daily living) definitions.
“We’ve had to delay some of that thematic project work we’ve been undertaking. [But] there are clearly [COVID-19-related] issues,” Ms Eccleston said.
“With dramatically rising unemployment, changes in work arrangements and some people closing out their super, this is a shifting landscape.
“The recent FSC TPD COVID claims initiative, which applies until the end of September is helpful in producing some more stability, but there’s still some way to go before we understand the full impact of the pandemic and this [flow-on] to the insurance held by members to superannuation.”
