ASIC sues Cbus over delayed death and disability payments
ASIC has launched legal proceedings against Cbus over delays in the processing of insurance claims made by members.
Court documents were filed by ASIC in the Federal Court on November 12, alleging members were impacted by delays to death and TPD claims processing, some waiting more than 90 days.
About 7500 member claims have been impacted by the delays in claims processing since September 2022 through to this month. Cbus has since taken action to improve servicing with additional people deployed across assessments, case management and complaints teams.
ASIC alleges the number of impacted members is closer to 10,000 - more than 50% of all the claims Cbus was dealing with in late 2022 - and that some claimants were left waiting more than 12 months for a payout.
Cbus has finalised more than 6000 of these claims with more than $755 million in benefits and/or insurance paid, while the remainder are still being managed. ASIC said Cbus has estimated the financial loss to impacted members is about $20 million.
According to court documents, some 7713 TPD were impacted, 4366 of which took more than 12 months to be resolved and only 830 were resolved within 90 days. About 3600 death claims were impacted, 1946 of which took more than 12 months to be processed.
"Cbus is sorry that delays have been experienced in the processing of insurance claims made by our members. Regrettably this has added to the distress of members and their families," a spokesperson for Cbus said.
"We apologise to our affected members and their families without reservation and promise to do better.
"Cbus has implemented a number of measures that are reducing delays and is committed to further improving management of insurance claims.
"Cbus has established a compensation program for affected members which is being implemented now."
The spokesperson added that Cbus has been cooperating with ASIC during its investigation and notes that the regulator has commenced proceedings in the Federal Court.
"Cbus will invite ASIC to engage in alternative dispute resolution processes to avoid protracted litigation," the spokesperson said.
ASIC said Cbus also failed to regularly assess scale of delays within its outsourced service provider, Australian Administration Services, a subsidiary of MUFG Pension and Market Services, formerly Link Group.
ASIC also claims that Cbus was made aware of the issue between November 2022 and February 2023 but did not report it to ASIC within 30 days as required under the reportable situations regime. ASIC says when the issue was reported in August 2023 and September 2023, Cbus wrongly claimed the issue was not ongoing and made other misleading claims, including that it had only learned of the issues in July 2023.
ASIC deputy chair Sarah Court said delays in claims processing cause real harm to families who may be relying on the payments to meet critical expenses.
"This adds to difficult personal circumstances, whether grieving for a loved one or dealing with severe injury or illness. The additional anxiety and pain these delays caused compounded the issues these members and their families faced," she said.
"Trustees cannot outsource accountability when it comes to claims handling. It is the trustee's responsibility to ensure there is adequate oversight of their systems and to prioritise the resources necessary to deliver the services they have promised to their members.
"We allege Cbus failed its members and claimants at their most vulnerable time, and we are taking this case to protect all those vulnerable Australians trying to access the financial support to which they are entitled.
"The systemic failure by superannuation trustees to deliver essential member services in a timely manner is a key priority for ASIC and we will continue to take action to hold trustees to account."
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