The corporate regulator has taken legal action against AustralianSuper over its alleged failure to process and pay thousands of death benefit claims “as soon as practicable”.

About 7000 claimants suffered financial loss due to delayed processing of claims, the Australian Securities and Investments Commission says in a statement to the Federal Court.

“Claimants that were impacted by AustralianSuper’s delay in processing death benefit claims experienced distress and/or inconvenience.”

The alleged misconduct happened between July 1 2019 and October 18 last year. The fund took between four months and four years from the date claim forms were returned to pay or decline at least 6897 claims, ASIC says.

“It is vital that death benefit claims are processed in a timely manner,” commission deputy chair Sarah Court said. “Delays are likely to cause further pain and anxiety to people who are already suffering from grief, making what is already a difficult time even harder.”

A spokesperson for AustralianSuper told insuranceNEWS.com.au the fund is “considering ASIC’s claim carefully and will respond on the substance of the claim in due course. Paying out members’ retirement savings after they die is the final service we provide them.” 

The ASIC statement to the court says the fund has provided remediation to some affected claimants.

The civil penalty case is the regulator’s second action against a super fund trustee.

Last November, it began suing Cbus trustee United Super, accusing it of delaying the processing of thousands of death benefit and total and permanent disability claims.

Ms Court said: “It is the trustee’s responsibility to ensure sufficient resources are available to service members and claimants, and that adequate oversight of systems is maintained to deliver all services as promised to members.”

The regulator says service failures in the superannuation sector remain an enforcement priority.

See ASIC’s statement to the court here.