The Australian Securities and Investments Commission (ASIC) has ordered United Super, the trustee of the Construction and Building Unions Superannuation Fund (Cbus), to pay a penalty of A$23.5m ($15.3m) for unreasonable delays experienced by thousands of members and claimants arising from serious failures to handle insurance claims in a timely manner.
This follows admissions by Cbus that serious failures caused delays in processing death benefits and total and permanent disability (TPD) insurance claims, that have impacted more than 7,000 Australians in distressing situations.
The penalty was imposed on top of Cbus’ own remediation programme to pay approximately A$32m in compensation to the estimated 7,400 affected claimants and members for lost earnings and wrongfully charged fees.
“Thousands of Australians suffered real and avoidable harm because of long delays and systemic failures in the way Cbus handled important and sensitive insurance claims,” said Sarah Court, Deputy Chair of ASIC.
“When people were grieving the loss of a loved one or grappling with a life-altering injury, Cbus should have ensured timely and accurate decisions were made on their insurance claims. Not only was Cbus aware of increased insurance claim volumes, but it was also put on notice by its own customers who were complaining about the long delays they were enduring.”
The Court found that between 27 March 2023 and 1 May 2023, between 48% and 56% of all death claims (numbering between 438 and 479 claims) had been open for more than 365 days, and between 38% and 43% of all TPD claims (numbering between 391 and 409 claims) had been open for more than 365 days.
The Court declared that Cbus contravened the Corporations Act by failing to do all things necessary to ensure claims were handled efficiently, honestly and fairly by failing to:
- Take all reasonable steps to ensure claims were being processed in a reasonable period of time.
- Ensure that it held accurate and complete data necessary to determine the volume and age of all claims.
- Ensure the relevant committees had sufficient oversight over issues with processing claims.
- Adequately monitor and manage the administrator’s performance under the Administration Agreement.
The Court also found Cbus had contravened the Corporations Act on two further occasions by failing to report the matters to ASIC within the required time frame. Reports were required to be made to ASIC on 3 March 2023 and 20 July 2023, but nothing was reported to ASIC until 5 August 2023.
In addition, Cbus was also ordered to pay A$500,000 towards ASIC’s legal costs and undertake a compliance programme requiring it to obtain expert reports on whether it now has appropriate systems and processes in place.
The penalty exceeds the A$18.5m in revenue United Super declared in FY2024.