Some super funds charged fees to deceased members | Australian Markets

Some superannuation funds have continued to deduct insurance coverage premiums and financial advice from deceased member accounts.

The observe has been revealed within the Australian Securities and Investments Commission’s damning report on how superannuation funds have been handling death benefit claims, REP 806.

In an statement reminiscent of the criticism directed at financial planning companies which continued to charge useless purchasers, the ASIC report stated that whereas it didn’t accumulate information about fees charged as half of its review, it did be aware what may be a common observe.

“We understand that it is common for trustees to continue to charge administration fees and investment fees, but one reviewed trustee is reconsidering this policy,” the ASIC report stated.

“Trustees should not continue to deduct insurance premiums or financial advice fees while processing a death benefit claim,” it stated.

The significance of ASIC REP 806 is that it’s based mostly on a review of 10 vital superannuation funds traversing all three sectors of the superannuation industry – industry, retail and company superannuation funds.

When it got here to claims handling time-frames, the report discovered that none of the superannuation funds truly managed to meet 100% completion during the review period.

“Overall, there was significant variation in claims handling times across the reviewed trustees,” the report stated. The quickest trustee closed roughly 48% of death benefit claims within 90 days whereas the slowest trustee closed solely about 8% in that time.

“The fastest trustee had closed approximately 75% of its death benefit claims at 180 days, whereas the slowest trustee had only closed approximately 47% of its claims.”

Importantly, the report indicated that funds which dealt with death benefit claims internally turned in higher performances than these which outsourced the method.

“Trustees that processed claims internally or with a related-party service provider (insourced trustees) closed 36% of claims in 90 days in comparison to trustees who processed claims with a third-party service provider (outsourced trustees), who closed 15% in 90 days,” the report stated.

Superannuation fund consultant group, the Association of Superannuation Funds of Australia (ASFA) responded to the ASIC report with a formal apology from its members, with its chief govt, Mary Delahunty saying the sectors “knows we have let down some of our members and their families”.

However, ASFA stated funds had already taken the criticisms on board and good progress was being made in bettering claims handling – one thing that was being mirrored in a decreased quantity of complaints lodged with the Australian Financial Complaints Authority (AFCA).