Published: 12 February 2018
Author: RCT Super Law team
Royal Commission must probe Super disability payout delays
As The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Financial Services Royal Commission) kicks off today, it will have a lot on its plate. Not the least of its concerns should be the appalling way in which superannuation funds treat their clients when they lodge claims against the insurance policies which are part of an employee’s superannuation.
Super funds drag their heels on disability payouts
At RCT we represent injured or unwell workers on a daily basis, including helping them to access the insurance entitlements attached to their superannuation funds. These include Total and Permanent Disability benefits and Income Protection benefits. With great frustration, we see the devastating impact that significant delays, poor decision-making processes and inadequate measures to address misconduct can have on our clients, their families and loved ones.
For instance, we repeatedly lodge claims with superannuation funds that contain all relevant information. Once a claim is lodged, superannuation funds then request additional information on the basis that it will assist them to make a decision. Once this is provided, further information is often then requested again creating further delays and frustration. This can only be viewed as being a delay tactic on behalf of the fund and has a detrimental effect on the timeline of the claims process and ultimately our clients.
Unnecessary delays compound problems
We also see on occasion, superannuation funds approving the payment of benefits and then withholding the amount pending settlement negotiations. In one particular instance the superannuation fund approved ongoing income protection payments and then requested that we negotiate a final payout figure. Multiple attempts have been made in this regard, however the superannuation fund has failed to respond, ultimately leaving our client in limbo and entirely at the funds discretion.
Delays in making a final determination on insurance benefits also causes our clients significant financial and emotional stress. One example of this is where a total and permanent disablement claim was lodged, and all requirements fulfilled by the applicant. The fund claims to have referred the matter to their trustee and the trustee has then referred the matter to the insurer for reassessment, without explanation.
This is a blatant example of excessive time delays without any explanation or avenue for our client to seek resolution of the matter. To add insult to injury, the superannuation fund is under no time constraint to make a decision leaving our client with no avenue to pursue the matter.
Changes by Super funds not communicated to members
Another example is the poor communication between superannuation funds and their members. We often speak with clients and discover that their insurance has been altered without their knowledge. While the fund may correspond with their members broadly, unless the member responds, the changes are made without notice. This is often to the detriment of our clients.
Probe into Super funds on insurance
The Royal Commission has been charged with investigating the effectiveness of mechanisms for redress for consumers of financial services who suffer detriment as a result of the misconduct of financial services. They have also been charged with investigating the adequacy of the existing laws with regards to regulating and addressing misconduct.
As part of doing their job, the Commission must conduct a full investigation into the practices of superannuation funds as well, so that ill or injured people can obtain the benefits they are entitled to and life can be made a little bit easier in difficult times.