ASIC has released its report on the provision of insurance cover through superannuation that has found super funds took too long to resolve member complaints.
Over 40 superannuation trustees were reviewed in the Insurance in Superannuation Report with the corporate regulator focusing on certain key areas.
The areas focused on included insurance claims, disclosures about insurance, rebates paid to trustees and whether members were defaulted into demographic categories.
The review made several findings but certain areas of concern for ASIC were poor handling and defaulting member changes.
ASIC said that a third of trustees in the review took more than 90 days on average to resolve complaints about insurance in 2017–2018.
The review also found that some trustees were automatically defaulting members as ‘smokers’ when transferring them to different sections of the same fund.
This practice resulted in higher insurance premiums payable by those members, but all trustees have agreed to discontinue this practice.
ASIC deputy chair Peter Kell said there was considerable work to do in the industry to raise standards in the areas covered by the review.
“In the coming months, ASIC will be focused on ensuring that members do not experience adverse outcomes arising from poor complaints handling or inappropriate defaults.
“It is essential that trustees meet their obligations to deal with consumer complaints about superannuation in a timely manner and provide reasons for decisions as required,” said Mr Kell.
ASIC will continue to work with the industry as more changes are implemented, including the changes that are set to be implemented in July 2019.
The commission has also said it would be consulting for the Australian Financial Complaints Authority (AFCA), that will begin operating in November, on the need for stronger internal dispute resolution requirements in the superannuation industry.
The ASIC report also has set out actions that trustees should take to achieve better outcomes for members who acquire life insurance coverage through their super funds.
Eliot Hastie is a journalist at Momentum Media, writing primarily for its wealth and financial services platforms.
Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.
Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).
You can email him on: [email protected]
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