ASIC finds systemic failures in super death | Australian Markets

The Australian Securities and Investments Commission has uncovered systemic failures in how superannuation funds deal with death benefit claims, revealing delays, poor service, and a lack of board oversight that left grieving households ready months for superannuation payouts.

The 2025 report reviewed 10 main trustees representing 38 per cent of the market and located none tracked end-to-end claims instances or efficiency.

The regulator additionally uncovered “systemic failures” by some trustees, together with extreme delays and poor service, unclear and inconsistent processes, ineffective and insensitive communication, and insufficient assist for First Nations claimants.

The findings observe a damning evaluation of claims handling at two of the nation’s largest super funds, Australian Super and CBUS, which resulted in ASIC suing each funds.

CBUS was sued in the Federal Court final 12 months for failing to course of more than 10,000 death and incapacity funds, whereas Australian Super was hit with a $27 million wonderful for related breaches throughout 7,000 claims, together with taking three years to pay a declare to a deceased individual’s relative, regardless of having the required info.

ASIC chair Joe Longo stated the industry ought to instantly review and handle death advantages claims handling and undertake 34 suggestions from the regulator.

“At the heart of this issue is leadership that doesn’t have a grip on the fund’s data, systems and processes – and ultimately it is the customers who suffer for it,” Mr Longo stated.

“This kind of disconnect is unacceptable in any area of corporate Australia, but in the superannuation sector it is particularly serious, because super affects everyone from the boardroom to the living room.”

In one case, a widow grieving her husband’s death confronted vital delays and frustration when claiming his $600,000 death benefit, ASIC discovered. Despite a binding nomination naming her as the only beneficiary, the trustee repeatedly requested paperwork she had already supplied and, at one level, incorrectly acknowledged there was no nomination.

Despite her requests for readability and help, the method dragged on for almost a 12 months, together with a three-week delay after approval resulting from a misplaced doc. Even after fee, resolving a question concerning the benefit calculation took an extra two months.

“Many of the complaints we read were distressing. We saw deep grief, vulnerability, frustration and genuine suffering,” ASIC Commissioner Simone Constant stated.

“Grieving Australians should not have to suffer further stress because of the failure of superannuation trustees to approach claims in a timely, clear and respectful manner.

“Trustees have not put in place meaningful performance objectives, tracking or reporting, and have failed to approach claims handling with consumers front of mind.”

ASIC stated there have been large gaps between the slowest and quickest trustees, with the slowest solely processing claims within 90 days 8 per cent of the time, whereas the quickest processed 48 per cent of claims within that time body.

The regulator additionally discovered that 27 per cent of claims concerned poor customer support, reminiscent of calls not being returned or queries being dismissed.

For First Nations claimants, ASIC discovered that more than three-quarters of claims had been delayed by processing points within the trustee’s control.

ASIC additionally discovered that superannuation trustees outsourcing the method to a third-party supplier closed solely 15 per cent of claims within 90 days. Those who dealt with claims in-house accomplished 35 per cent in the identical time body.

The regulator discovered that superannuation boards didn’t conduct correct oversight of death advantages for members.

Many didn’t obtain common or full reporting on claims handling efficiency, with some fully unaware of delays in uninsured claims, which comprised the bulk of circumstances.

ASIC discovered boards lacked entry to end-to-end knowledge, didn’t set efficiency benchmarks, and had been unable to establish or handle systemic failures. This absence of structured oversight represented a clear governance breakdown in an space with vital penalties for bereaved members and their beneficiaries.