ASIC sues AustralianSuper as regulator ramps up its attack on death-benefit failures

The corporate regulator has ramped up its pursuit of superannuation funds that delay the processing of death benefit claims with the latest lawsuit being filed against AustralianSuper, the trustee of Australia’s largest superannuation fund.

The Federal Court action against AustralianSuper follows similar action launched in November against The Construction and Building Unions Superannuation Fund (Cbus) which is alleged to have cost more than 10,000 members $20 million.

In the latest claim, the Australian Securities and Investments Commission (ASIC) is alleging that AustralianSuper delayed processing nearly 7,000 death benefit claims between 1 July 2019 and 18 October 2024.

ASIC alleges that AustralianSuper, which has 3.5 million members, failed to process death benefit claims “efficiently, honestly and fairly” by taking between four months and four years to assess at least 6,897 death benefit claims.

ASIC also alleges AustralianSuper failed to pay member benefits as soon as practicable after the death of at least 752 members.

In one case, despite having all the information required to pay the benefit, AustralianSuper is alleged by ASIC to have taken 1,140 days to make the payment while others took 438, 412 and 366 days.

In 254 cases, AustralianSuper took between 15 to 213 days to provide the claim form, according to ASIC’s claim filed in the Federal Court.

“At its heart, this matter is about protecting vulnerable Australians and their families,” says ASIC’s deputy chair Sarah Court.

“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.”

ASIC says that failures in member services by superannuation funds remain an enforcement priority for the corporate regulator, which led to the action in November against United Super, the trustee of Cbus.

“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,” says Court.

“Accountability cannot be outsourced. Our work on member services will continue with the release of our death benefits report in coming weeks.”

ASIC is seeking penalties, declarations, an adverse publicity order and other orders against both United Super and AustralianSuper for compliance matters to be implemented.

The action against AustralianSuper follows the settlement last month of an earlier Federal Court action relating to the fund’s contravention of its obligations to combine multiple accounts held by members.

After ASIC and AustralianSuper jointly submitted to the court that penalties totalling $27 million were appropriate, the court ordered the super fund in February to pay theses penalties.