Clicky

RC hears Rest acted in insurer’s benefit

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has heard that superannuation fund, Rest, acted in its insurer’s benefit, and not the benefit of its members.

The Commission was first told that the super fund, represented by service delivery manager, Lachlan Ross, had a policy whereby it relied on the employer or employee to notify the fund of any changes to the employee’s status, particularly if they were to cease employment.

“That’s not very realistic, is it, Mr Ross?” asked Senior Counsel assisting, Mark Costello.

Related News:

The Commission was taken through a case study involving a young member who worked at McDonald’s, and subsequently became a paraplegic when she was no longer with the fund.

Rest notified the member that she had $180,000 worth of total and permanent disability insurance coverage, but only in fine print did it mention she was required to notify the fund of her employment status.

Rest subsequently took over six months to refer the member’s case to their group insurer, AIA, which was well in excess of the five days prescribed by the relevant voluntary industry code.

The Commission heard that the fund failed to check the member’s employment status, and was in fact notified by its external administrator, AAS, that the member was excluded from coverage.

“In this instance, rather than doing the work of pursuing the claim for the member, AAS [the external administrator] identified an error to the possible advantage of the insurer,” said Costello.

Ross said that was an “appropriate” way for the administrator to behave, to which Costello posed that it was a “contradiction” for the trustee to review the claim when the trustee was to identify the basis on which the claim would be denied.

 




Related Content

Mortgage brokers adopt planner model but with commissions

Despite some evidence given to both the Royal Commission and a Parliamentary Committee of Inquiry a key mortgage broking group is urging the retention...Read more

RC to make it harder to get mortgage: Finch Financial

The irony of the Royal Commission is that it will make life so much harder for the Australian consumer when they want to get a mortgage, according to ...Read more

Financial Planning in 2018 is about preparing for change

2018 has been a big year so far for Australia’s financial planners – for reasons both good and bad. The Banking Royal Commission is an unavoidable...Read more

Author

Comments

Comments

This is just the tiniest tip of the iceberg of ISA malfeasance and definitely not adhering to their sole purpose for existence, to act in the superannuants, or members, best interests. Time for the entire ISA structure to be torn apart and remove the conflicted self interested Union/Labor lackeys.

Add new comment