ASIC Sues AustralianSuper Over Death Benefit Delays

The Australian Securities and Investments Commission (ASIC) has taken legal action against AustralianSuper, the country’s largest superannuation fund, over alleged delays in processing death benefit claims. ASIC filed a lawsuit in the Federal Court, accusing AustralianSuper of inefficiency and lack of transparency in handling nearly 7000 death benefit claims between 2019 and 2024. This move comes as ASIC is set to release a comprehensive report exposing misconduct within the superannuation industry, indicating a broader issue beyond this particular fund.

According to ASIC, AustralianSuper took an extended period ranging from four months to four years to either approve or deny the claims, affecting numerous beneficiaries, including those with valid binding death nominations. The regulator highlighted cases where members waited over a year for payouts, with one instance where a claim took four years due to alleged beneficiary information discrepancies. AustralianSuper attributed these delays to a surge in member deaths during the pandemic and operational challenges, prompting the fund to bring claims processing in-house after investing $120 million to enhance services.

ASIC’s legal action underscores concerns about governance and operational practices in the superannuation sector. The regulator emphasized that blaming third-party contractors for delays, as seen with AustralianSuper’s contractor Link, does not absolve funds of their responsibilities to members. The alleged misconduct predates the pandemic, indicating systemic issues that extend beyond external factors. ASIC’s Deputy Chair, Sarah Court, expressed dissatisfaction with the prolonged processing times, noting that the forthcoming report will shed light on widespread misconduct across various funds, signaling a need for industry-wide reforms.

AustralianSuper’s case is part of a broader regulatory push to improve industry standards and member services. The fund, under scrutiny for delays in death benefit payouts, has initiated compensation payments following internal reviews. Similarly, Cbus, another superannuation fund, is engaging in mediation with ASIC over delays in insurance claims. Industry experts stress the importance of establishing clear service standards to protect consumer interests and ensure timely resolution of claims.

The legal action against AustralianSuper serves as a catalyst for implementing mandatory service standards in the superannuation sector. The ongoing scrutiny underscores the critical need for regulatory oversight to address systemic issues and enhance consumer protection. As the industry faces increasing regulatory pressure, the focus is shifting towards ensuring prompt and efficient processing of member claims to uphold trust and transparency within the superannuation landscape.