Dated 6 November 2023, Bragg called on the minister for financial services and ASIC chair Joseph Longo to prioritise serious misconduct issues on the part of superannuation trustees.
In the Australian Financial Complaints Authority (AFCA) 2022-23 annual report, it revealed there were 6,957 complaints related to super compared to 5,286 in the previous year.
He noted that some 377 complaints were made AFCA about lengthy delays in super payouts, which was in addition to some 1,400 complaints made to AFCA about group life insurance in the super sector for the same financial year.
“Given this matter is within the remit of your portfolio, I ask that you provide a timetable for action on this matter so that Australians can access the much-needed benefits that they are entitled to from superannuation funds,” Bragg stated.
“Australians cannot wait until the next Senate Estimates in February 2024 for an answer.”
In a Senate economics reference committee last week, the senator had asked ASIC deputy chair, Sarah Court, if the corporate regulator is aware of the delays being incurred by members.
Court said: “Some of those themes that are subject of those media reports are about processing delays for up to two years and poor communication via the trustee with members.
“We are also aware that there is a high number of AFCA complaints in relation to those issues as well so we are looking at them. We think they are conduct issues by the superannuation trustees, we are prioritising a look at that in the next little while.
“This is an issue we have elevated to be a priority issue for us.”
In the letter to Jones, Bragg also noted a recent crackdown on investment scams with ASIC, with some 2,500 such scam websites taken down since July or 20 dodgy websites a day.
“Given ASIC has a clear regulatory remit over superannuation trustees, notably their obligation to provide ‘efficient, honest, and fair financial services’, I ask that you provide advice on what action is being taken to protect consumers from poor conduct from superannuation trustees with respect to delayed death benefits,” Bragg stated.
He added the misconduct is occurring “right under the noses of the regulators.”
In 2022-23, Australia’s largest super fund AustralianSuper, which has $300 billion in funds under management, and insurer TAL were the subject of over a quarter (26 per cent) of all group life insurance complaints to AFCA.
Bragg wrote: “Given your enthusiasm for anti-scam initiatives in collaboration with ASIC to protect Australians, I ask that you prioritise these serious misconduct issues on the part of superannuation trustees, given the considerable number of complaints to AFCA by Australians seeking the payments they are entitled to.”
In a recent interview on ABC Radio, Jones had called on super funds to “lift their game” with material, meaningful changes and had not ruled out regulatory levers to do so.
“Look, we won’t rule out looking at regulatory levers. I’d rather not, to be honest. I don’t want the government to be in a paternalistic position where we’re saying, ‘Well, dear fund, can you please pick up the phone and answer those questions’ or ‘Can you please ensure that inquiries are being dealt with in a reasonable time frame and can you ensure that insurance claims are being dealt with, particularly the really tough ones in somebody’s life, like a death or permanent disability claim.’
“These things have got to be dealt with sensibly and quickly, and too often they’re not. So, we won’t rule out looking at what regulatory levers are available,” Jones said.
“I’ve spent the last year sending a very clear message to funds that the status quo is not good enough. At the same time, I’ve said to them, ‘We will look at where the regulatory obstacles are to you doing what the government expects and thinks you need to be doing, but that’s not the end of the story.
“You’ve got to start shifting your mindset, too, away from one where you have a passive relationship with your members to one where you know much more about them and you’re much more responsive to their needs.”
Good initiative