Industry super fund complaints up, retail down
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Written complaints to the Superannuation Complaints Tribunal (SCT) about industry super funds increased by 25 per cent last year, while complaints about retail funds decreased slightly.
According to the 2010-11 SCT annual report, there were 509 complaints about industry super funds - up from 400 in 2010-09.
While retail funds continue to receive the most complaints, with 735 in 2010-11 (down from 758 in 2009-10), over the past five years the trend has been clear: complaints are increasing for industry super funds and decreasing for retail funds.
Corporate Super Specialist Alliance president Douglas Latto said the different models employed by each sector helped to explain the trend.
"Industry funds are very much a reactive model. They're not out there providing personal advice in a proactive manner," Latto said.
On the other hand, financial advisers at retail funds are going out into the workplace to increase education and financial literacy, he said.
The decrease in complaints at retail funds is likely because their members are better educated than their industry super fund counterparts, Latto added.
Association of Superannuation Funds of Australia chief executive Pauline Vamos said the lack of a "middle man" in industry super funds could result in members going directly to the SCT.
"One of the obvious differences is that most people deal with their industry super fund directly, and with retail providers there is usually an intermediary like an adviser," she said.
But for Financial Planning Association general manager for policy and government relations Dante De Gori, financial planners could in fact be the reason behind the increase in complaints about industry super funds.
"People don't know what the SCT is, and most people would accept the decision of the trustee. Some of the extra cases may be because financial planners know the complaints process and take that extra step," De Gori said.
SuperRatings managing director Jeff Bresnahan was quick to point out that the number of complaints to the SCT was "incredibly low", given there are "33 million accounts out there" - and particularly low compared to the banking sector.
He said the global financial crisis would explain an increase in complaints about investments, but it was likely that improved insurance offers from industry super funds had played a role as well.
"The sums involved in [group] insurance are a lot higher now. Industry funds have negotiated improvements of 30-40 per cent with the insurers," Bresnahan said.
The result is that clients are less likely to walk away from a total and permanent disability claim now - they are more likely to go to the SCT, he said.
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