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ASIC review turns spotlight on trustees over death benefit claims
The corporate regulator has shared some ‘disappointing’ findings upon reviewing the public communications of more than 20 trustees with regards to death benefits.
ASIC has flagged areas for improvements in trustees’ public communications following the first phase of its review into death benefit claims.
Reviewing the public website communications and resources about death benefit nominations from 22 trustees, representing almost 70 per cent of total APRA-regulated super fund assets, ASIC highlighted actions trustees could be taking to improve their approach and the experience of their members.
Earlier this year, it had flagged that the superannuation sector remains a key area of focus in the coming year, with death benefits ‘front and centre’ for the regulator.
Appearing in the Senate economics legislation committee in February, ASIC deputy chair Sarah Court said claims handling by super trustees remains a priority for the regulator and that a dedicated, multiphase project is underway.
Unveiling the findings of the first phase of this review, ASIC observed that complaints about delays in death benefit claims handling saw a disproportionate increase between 2021 and 2023, surging from 2.5 per cent to 8.5 per cent of service-related complaints to the Australian Financial Complaints Authority (AFCA).
In particular, it noted that a small number of trustees appear to be responsible for a disproportionate share of complaints.
“Since the beginning of 2023, ASIC has collected internal dispute resolution (IDR) data from all trustees. This is a shorter time series than for AFCA’s external dispute resolution (EDR) data, but the trends are similar. In particular, service issues made up more than half of all complaints to trustees,” ASIC noted.
“Our analysis of this data identifies IDR complaints specifically about delays in handling death benefit claims increased in the first quarter of calendar 2023 and have remained high.”
Looking at the websites of the 22 trustee funds, ASIC found all the websites had some information about death benefit beneficiary nominations; however, the quality of the information provided was poor in a few areas. Three websites did not have any content explaining the importance of making a nomination while 16 trustees of 22 omitted crucial details in one or more of their beneficiary nomination forms, such as definitions of dependents or what might make a nomination invalid.
Moreover, it found website communications on how to make a claim following the death of the member were ‘disappointing’.
Four of the 22 websites did not contain any information about the claims process and six websites did not explain how to commence a death benefit claim. According to ASIC, only eight websites contained information explaining how long it may take to finalise a death benefit claim.
“Communicating clearly can reduce beneficiary anxiety, stress, and confusion for beneficiaries associated with death benefit claims, while also reducing the workload on claims staff and complaints about the process,” ASIC remarked.
In its review, the corporate regulator also looked into the assistance available on the website for First Nations, culturally and linguistically diverse, and vulnerable people.
It observed: “Concerningly, only four of the websites provided or offered information on death benefit claims in languages other than English. Just 10 websites mentioned assistance for members speaking languages other than English or offered a translation or interpreter service on their contact details page.
“Only nine of the websites offered assistance for hearing impaired people. Only seven of the websites provided a specialist contact centre number, or options for alternative proof of identification for First Nations beneficiaries.”
According to ASIC, there is “a lot of room” for trustees to make the process less daunting for a member’s beneficiaries by providing more practical guidance.
“While some trustees are doing better than others, all trustees should continuously focus on effective communication with members and beneficiaries,” it said.
“Trustees should also be regularly reviewing complaints received about their claims handling processes and procedures to identify opportunities for uplift.”
In the second stage of this review, ASIC said it is seeking detailed information from a selection of trustees to obtain a better understanding of the timeliness of claims, their processes, and where improvements may need to be made.
AUTHOR
Rhea Nath
Rhea L Nath is a journalist on Super Review and InvestorDaily, with a focus on funds management, superannuation, and institutional investment. Previously, she covered small business and entrepreneurship news at Dynamic Business and multicultural issues at Indian Link Media Group. In 2022, she was named Young Journalist of the Year at the NSW Premier’s Multicultural Communications Awards.
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