Superannuation funds are ignoring warning signs as complaints about the way they treat customers mount, the corporate watchdog says.
The Australian Securities and Investments Commission has found superannuation funds wanting in handling members’ complaints at a critical time for the $3.4 trillion industry.
As millions of Australians transition from accumulating super balances to withdrawing their retirement income, issues such as timely payment of death benefits have been piling up.
Commissioner Simone Constant said super funds should treat complaints as the “canary in the coal mine”, but were often ignoring the warning signs.
“Superannuation is too important for there to be failures now, in terms of member services and complaints,” she told AAP.
The death benefit failures were an example of how better complaints-handling could have saved members and their families from harm, the regulator found in a report released on Monday.
The regulator has been cracking down on the industry after finding widespread delays in trustees paying out deceased customers’ remaining super balances and insurance payments to family members.
In some cases, loved ones waited years to receive money they were owed.
The regulator reviewed all 45 superannuation trustees and found a quarter were not regularly analysing their complaints data to identify systemic issues, Ms Constant said.
That comes despite a 43 per cent year-on-year increase in superannuation complaints to the Australian Financial Complaints Authority.
Ms Constant said the issue was industry-wide, declining to single out any particular funds for poor complaints handling.
“We see some funds detecting zero or practically zero systemic issues from complaints, despite AFCA identifying complaints (that could be systemic) at twice the rate of the industry,” she said.
While complaints growth flattened for a period after the death benefits issues were identified, the regulator has seen it rising again.
That raised real concerns about customer culture, complaints culture, and risk culture across the industry, Ms Constant said.
“When we see several of the funds attributing well more than half of the root causes to the customers, essentially blaming the customer, we’re really concerned about whether the industry has used the time, used the processes, and used their complaints data to understand what’s really going on with their members in terms of these important services,” she said.
Peak body the Association of Superannuation Funds of Australia said the industry heard loud and clear that trustees needed to do better.
“There are clear areas for improvement here, and the sector will use the information ASIC has collected and its recommendations to act quickly to better use complaints to improve how we look after members,” the association’s chief executive Mary Delahunty said.
“Members reasonably expect super funds to listen to them, and this should be uniform across the industry.”
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