The Australian Securities and Investments Commission (ASIC) has commenced legal proceedings against AustralianSuper Pty Ltd, the trustee of the nation’s largest superannuation fund, alleging widespread delays in processing death benefit claims.
The lawsuit, filed in the Federal Court, claims nearly 7,000 cases were not handled in a timely manner.
According to ASIC, between July 1, 2019, and Oct. 18, 2024, AustralianSuper took between four months and four years to assess at least 6,897 death benefit claims from the date claim forms were returned. The regulator also alleges that in at least 752 cases, the super fund failed to pay benefits to members’ beneficiaries as soon as practicable after death.
ASIC cited multiple instances where claims took an extended period to be finalised. One case allegedly took 1,140 days to process despite all required documentation being available, while others were delayed by 438, 412, and 366 days. In 254 cases, AustralianSuper allegedly took between 15 and 213 days to issue a claim form to beneficiaries.
ASIC alleges AustralianSuper breached provisions of the Corporations Act, including the requirement to provide financial services efficiently, honestly, and fairly. The regulator is seeking financial penalties, declarations, an adverse publicity order, and orders requiring compliance measures.
ASIC deputy chair Sarah Court underscored the regulator’s focus on ensuring superannuation trustees meet their obligations.
“It is vital that death benefit claims are processed in a timely manner. 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,” she said.
The regulator has identified member services failures within the superannuation industry as a key enforcement area. In November, ASIC initiated civil penalty proceedings against United Super Pty Ltd, the trustee of Cbus, over delays affecting more than 10,000 members’ death benefit and total and permanent disability claims.
“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. Accountability cannot be outsourced,” Court said.
AustralianSuper has acknowledged ASIC’s legal action and stated it is reviewing the claims.
“We are considering ASIC's claim carefully and will respond on the substance of the claim in due course,” it said.
The super fund attributed processing delays to challenges arising during the COVID-19 pandemic, including increased member deaths and workforce disruptions.
AustralianSuper said it initially worked with a service provider to address the backlog but later decided to manage claims processing internally.
“We recognised this and developed a strategy with our service provider to clear the backlog of claims. Despite some improvement, we were not satisfied the backlog was reducing fast enough so we made the significant decision to bring the processing of death claims in house. Bringing this function in house strengthens our ability to deliver this important service efficiently and empathetically,” it said.
The fund also highlighted ongoing efforts to improve its operations, including a $120 million investment in service enhancements. As part of this, a dedicated Bereavement Centre was launched in April 2024, employing 75 case managers to handle claims. AustralianSuper said claim processing times have improved as a result.
