The chief executive of industry super fund Cbus has apologised in a Senate committee for the fund’s “far from perfect” behaviour, amid warnings from ASIC that all providers should be “on notice” over bad behaviour.
The Senate Economics References Committee hearing came in the wake of regulator Australian Securities and Investments Commission (ASIC) taking industry superannuation fund Cbus to court.
According to ASIC, Cbus failed to process more than 10,000 death and disability claims in a reasonable timeframe.
After the hearing, deputy chair of ASIC Sarah Court said it was not just Cbus who had done wrong, and all super funds would be “put on notice”.
“We think that the delays in payment of death benefits and disability claims in the superannuation sector are significant,” she said.
Cbus CEO Kristian Fok apologised for the super fund’s “far from perfect” behaviour to the Senate committee.
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ASIC accused the fund of failing to process $20 million of claims.
“We have experienced delays that are unacceptable, but we are not withholding money,” Mr Fok said.
He added that the delays were largely due to Cbus’s administrator going through a large turnover in staff.
“Sometimes, those things take longer than anyone would like and we continue to find ways and seek ways to prevent this happening again,” Mr Fok said.
Widespread problem
Susan Quinn, advocacy manager at Super Consumers Australia, said this instance with Cbus was just a small part of the problem.
“From what ASIC is saying, this is a widespread problem,” she said.
“Today’s news just indicates a small part of it. We’re only talking about 10,000 people at one front here. This must be a bigger problem, and it’s really unclear why the funds are failing.”
ASIC agrees.
“We think they are widespread,” Ms Court said.
“We have done a lot, a big, deep surveillance piece in relation to this, we’ve looked at a whole range of different superannuation funds.”
ASIC confirmed its findings would be put into a report which would be released in early 2025 and more court action could come.
Sarah Court said the issue was widespread.
“We may well have more enforcement action to come,” added Ms Court.
“We are focusing on this issue very intensively in the coming months.”
Obligation to do better
Senator Jess Walsh started the Senate Economics References Committee hearing by asking how funds should support families to access benefits in a timely and responsive way.
Misha Schubert, chief executive at Super Members Council of Australia, said across the board, super funds had to do better.
“Australians rightly expect the highest standard of service from insurance, that was made clear again yesterday by regulators,” she said.
“We think there is a really important obligation across the system to be relentless in that focus on member service.”
She added that there had to be additional considerations to policy reform, such as digitising binding death nominations and other measures to speed the process of those claims.
“There’s a really strong imperative here for everyone across the system to have a laser-like focus on the experience of members.”
Super funds have been put on notice. (ABC News: Phil Scarano)
Using super to buy houses a ‘bad idea’
The question of whether people should be able to draw from their super to buy a home was asked at the Senate hearing.
According to Ms Schubert, the evidence was “crystal clear” that allowing people to withdraw from their super for buying property was a bad idea.
Member of the committee Senator Andrew Bragg is an advocate for using superannuation to help young Australians buy a home.
In September, he reaffirmed the Coalition’s plan to allow first home buyers to withdraw their superannuation for a property deposit.
He believes it would make a “minuscule or nil difference” to house prices.
Mary Deluntly, CEO of the Association of Superannuation Funds of Australia (ASFA), said the “evidence was overwhelming” that it would affect house prices.
She said the ASFA found allowing access to super for a home was “incredibly unfair” to an entire generation, who would be forced to choose between owning a house and a strong retirement savings pool.
Super fund HESTA also said it was a bad idea.
“HESTA does not believe the answer to affordable housing is access to superannuation funds. It is a nuanced issue but we cannot be releasing funds to access housing,” HESTA executive leader Jorden Lam said.
