The corporate regulator has threatened to take enforcement action against superannuation trustees that fail to lift their game when it comes to customer complaints, slamming them for too readily blaming issues on members as complaints in the sector have surged.
The Australian Securities and Investments Commission (ASIC) has urged superannuation funds to take accountability and listen to these complaints after its latest report found many are turning a blind eye to a growing mountain of issues being raised by customers.
ASIC commissioner Simone Constant, a former bank executive, said this was especially worrying given complaints are a “canary in the coalmine” – signalling issues such as payment errors, service delays, communication delays, and even fraud and misconduct. Leaving complaints unresolved could mean problems snowball into larger failures, she said, exposing customers to harm and erode trust in the multi-trillion dollar superannuation system.
The issue has become especially crucial amid an ageing population, with Constant warning that the challenges for the superannuation sector will only continue to grow as more people reach retirement.
“This is only going to become a bigger and weightier problem and challenge for super funds … and they need to get the basics right,” she said, noting that listening to customer complaints was one of the top lessons from the 2018 banking royal commission.
The Australian Financial Complaints Authority (AFCA) last month said superannuation complaints jumped more than 40 per cent last financial year, and it noted that people’s relationship with their super fund gets more important as they move into retirement.
Constant said AFCA appeared to be better at picking up problems than the funds themselves, as AFCA was far more likely to identify systemic issues, based on the two years of data ASIC examined.
The corporate regulator found nearly one quarter of the 45 trustees it examined failed to regularly analyse complaints data to identify systemic issues, breaching an enforceable requirement under the commission’s internal dispute resolution standards.
Nearly one third failed to identify a single issue over a two-year period, which the commission said was a “red flag” rather than evidence of better performance.
The commission also said several trustees “too readily attributed the root cause of complaints to members”, including blaming member expectations, awareness or error.
“Blaming the customer is not a complaints strategy,” Constant said. “Trustees need to look behind the complaint and ask whether poor communication, unclear processes, delays or system failures are driving member dissatisfaction. More than 60 per cent of the time, the customer, the messenger, is being shot and the customer is being blamed.”
Constant noted members being unable to access their payments, failing to get a timely response, or not receiving the support or services they were entitled to had serious consequences. “These are not abstract governance issues,” she said. “They affect people’s lives and the retirement savings they have worked hard to build.”
In one case, a tax-related system problem was raised through complaints for years before the trustee investigated whether other members were affected, with early estimates suggesting around 1200 members could be impacted.
The commission has urged superannuation trustees to review the findings of its latest report and assess the adequacy of their internal dispute resolution arrangements to identify and respond to the systemic issues being brought to their attention.
“We will pay particular attention to trustees that have been put on notice that they need to improve but have not taken sufficient and timely action,” she said, noting that where the commission was not satisfied, it would consider further responses including supervisory engagement, compliance action, licensing conditions and enforcement action.
Last November, the Federal Court ordered super giant Cbus to pay a penalty of $23.5 million after the commission sued the trustee for unreasonable delays experienced by more than 7000 Australians in handling death benefits and total and permanent disability insurance claims.
The commission said it would not hesitate to take action against superannuation trustees where it felt it was in the public interest to do so.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
Millie Muroi is the economics writer at The Sydney Morning Herald and The Age covering workplace and economics. She was formerly an economics correspondent based in Canberra’s Press Gallery and the banking writer based in Sydney. Instagram/TikTok: @millie.muroiConnect via X or email.From our partners
About the Author
