More legislative clarity is needed around insurance complaints in superannuation if the Australian Financial Complaints Authority (AFCA) is to handle such cases effectively, two super bodies say in a joint submission to Treasury.

The AFCA’s legislative arrangements do not cater for the unique complexities of insurance complaints and their interaction with the super system, the Australian Institute of Superannuation Trustees and Industry Super Australia say.

In the proposed model, complaints against insurers by fund members are not classified as super disputes.

“This is obviously a poor outcome and is not in the best interests of members,” the submission says. “This failure results in the trustee being excluded from the dispute resolution process, despite typically being the policyholder.

“Given the trustee’s direct decision-making role in the payout of an insurance benefit, it is integral that the trustee is involved in the dispute.

“The proposed legislation needs to reflect the fact insurance complaints within the super context may need to be treated as super complaints in order to involve the trustee throughout the process… failure to involve trustees in the process could lead to perverse and unfair consequences and potentially unenforceable decisions.”

The AFCA will begin operations in July next year, replacing the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.