The Albanese government has launched a pre-election crackdown on poor member services in the superannuation sector, especially delays in processing death benefit and insurance claims, as it looks to introduce new “mandatory and enforceable” industry standards. 

In a joint media statement on Tuesday, Treasurer Jim Chalmers and Minister for Financial Services Stephen Jones said they will soon release a new set of member service standards for public consultation.  

“The Government is ensuring that the same high standards Australians expect in investment performance also apply to member service,” the statement said.  

“While most funds offer services that meet or often surpass community expectations, there have been some areas where some funds have fallen short. 

“Better service is especially important during sensitive and vulnerable moments in members’ lives. Super funds have a responsibility to support members or their beneficiaries during these times, not add to their stress.” 

The standards will initially focus on uplifting services in critical areas of superannuation, including the timely handling of death benefits, “efficient processing” of group insurance claims, and accessible member communications.  

“All large APRA-regulated superannuation funds” are on the hook to comply with the new standards, but the specific size has not been defined.  

Brewing problems 

The clampdown came after the trustee of major profit-to-member super fund Cbus was sued by ASIC last November for alleged repeated failures in processing insurance claims. The market regulator claimed that, for a period of more than two years, Cbus failed to resolve over half of TPD and death benefits within 365 days.  

Cbus estimated there was a $20 million financial loss to members and claimants. 

Less than a month later, the nation’s biggest fund AustralianSuper said it has started a compensation program to proactively pay back beneficiaries whose claims were delayed. Claims that failed to be resolved within the fund’s internal target handling time of four months are entitled to payments.

The program covers 7000 people and $4.2 million in compensation.

It also follows research conducted by Conexus Financial, publisher of Professional Planner, in partnership with CoreData which suggested member experience is one area where a number of funds could do significantly better.