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ASIC sues Cbus over insurance claim delays
ASIC has filed documents in the Federal Court, formally launching legal proceedings against Cbus.
Super Review 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 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.”
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 said 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 the management of insurance claims.
“Cbus has established a compensation program for affected members which is being implemented now,” it said.
The fund stressed that it is co-operating 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 CFMEU.
Citing public allegations of serious misconduct within the CFMEU and subsequent steps taken by governments and the Fair Work Commission, APRA said at the time it “is concerned about the potential impact on trustees”.
Coalition says suit highlights ‘urgent’ need for change
Commenting on the proceedings on Wednesday, shadow minister for financial services, Luke Howarth, said ASIC’s prosecution of Cbus Super highlights the urgent need for better governance over the trillions of dollars Australians have in retirement savings.
“This is a critical failure from an industry which regularly lobbies to put more restrictions on how Australians can access their own retirement savings,” Howarth said.
“Superannuation is Australians’ money, not the fund managers, not the unions and not the governments.
“Given the prosecutions are now coming from both regulators, Labor has serious questions to answer about why it’s failing to take further action to secure Australians’ retirement savings.”
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