ASIC condemns shortcomings in super insurance
Insurance in superannuation complaints handling is often too slow, while some trustees have automatically defaulted members as smokers, the Australian Securities and Investments Commission (ASIC) has found in a review.
Deputy Chairman Peter Kell says there is still considerable work required to raise standards despite the introduction of some improvements.
“In the coming months, ASIC will be focused on ensuring that members do not experience adverse outcomes arising from poor complaints handling or inappropriate defaults,” he said.
“It is essential that trustees meet their obligations to deal with consumer complaints about superannuation in a timely manner and provide reasons for decisions as required.”
ASIC will be consulting on stronger internal dispute resolution requirements for superannuation after the Australian Financial Complaints Authority starts in November.
Trustees should have arrangements to consider and deal with complaints within 90 days, but almost a third reported longer average timeframes last financial year, the regulator says.
Adequate written reasons for complaints decisions also not always being provided.
The review finds some trustees are defaulting members as smokers when transferring them to different sections of the same fund, resulting in higher premiums. All trustees have since agreed to stop the practice.
ASIC says there are significant weaknesses in the Insurance in Superannuation code of practice, including its monitoring and enforcement arrangements, which limit its potential effectiveness.
The regulator will work with the Australian Prudential Regulation Authority to see how the code progresses and if it is effective in improving industry practices.
ASIC surveyed 47 trustees initially before refining its focus to 18 for a more detailed review.