There needs to be greater clarity around which external dispute resolution (EDR) bodies handle issues involving financial planners employed either directly by superannuation funds or under third-party arrangements, according to the Australian Institute of Superannuation Trustees (AIST).
The body, representing mostly industry funds, has pointed to jurisdictional confusion around whether and when planning matters should be handled by either the Superannuation Complaints Tribunal (SCT) or the Financial Ombudsman Service (FOS).
"The question of whether a third party financial service provider's decision is subject to FOS or the SCT can be very difficult to answer, requiring an in-depth assessment of the decision itself," the AIST has said in a submission to the Government's review of the financial services EDR framework.
It said the same jurisdiction question also arose in the context of insurance disputes.
"Typically, superannuation funds offer insurance to their members and engage the services of an insurer. In this scenario the contractual relationship is between the superannuation fund and the member, not the member and the insurer," the submission said.
"The effect of this is that when a member's claim is denied, they are able to lodge a dispute with the SCT, as the decision to refuse a claim is ultimately that of the fund, not the insurer. As the dispute is with the fund and not the insurer the dispute would not fall within FOS's terms of reference."
However, it said there were instances where it was unclear which body had jurisdiction to handle the dispute, citing the example of a superannuation fund which held a contractual relationship with an insurer.
"… the member lodges a claim with that insurer, and the insurer acts in such a way whereby a reasonable person would view their relationship as being with the member, rather than the fund," the submission said.
"For example the insurer may send correspondence directly to the member regarding their claim or be in continual contact with them throughout the process, without engaging the superannuation fund."
It said that in such circumstances it might be open to argue the relationship was between the insurer and the member, rather than between the insurer and the fund.
"In such a case the question of jurisdiction becomes complicated as the insurer is likely to be a member of FOS, and their decision may be subject to FOS as the decision was that of the financial service provider."