A grieving Indigenous woman was forced to wait more than 500 days to receive a death benefit payment following the death of her husband due to the “poor industry practices” of an unnamed superannuation fund, according to a landmark report released by the Australian Securities and Investments Commission (ASIC).
The distressing case, highlighted in ASIC’s report on Monday, was one of many examples illustrating “excessive delays, poor customer service, and ineffective claims handling procedures” across the industry.
Significant industry overhaul recommended
ASIC’s report makes 34 recommendations aimed at comprehensively reforming the superannuation sector, which currently faces substantial criticism over handling death benefit claims. The investigation encompassed the practices of 10 trustees responsible for 38% of Australia’s total superannuation benefits.
ASIC Chair Joe Longo emphasized the gravity of the issues uncovered by the report, urging super funds to address systemic failures promptly.
“At the heart of this issue is leadership that doesn’t have a grip on the fund’s data, systems and processes—and ultimately it is the customers who suffer for it,” Longo said. “This kind of disconnect is unacceptable in any area of corporate Australia, but in the superannuation sector it is particularly serious because super affects everyone from the boardroom to the living room.”
Indigenous widow left financially stranded
The ASIC report details the case of an Indigenous woman who repeatedly informed her husband’s superannuation fund about her financial distress following his death. Despite having a death benefit of around $100,000 available, she faced significant obstacles, including difficulty providing standard identification documents for her late husband.
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“The trustee did not respond to the wife’s concerns about financial hardship,” the ASIC report states. The fund took over a year to offer alternative identification solutions, ultimately delaying payment for over 500 days.
Moreover, by the time ASIC reviewed the claim, the widow had still not received the funds owed to her.
Widespread industry failures highlighted
The report follows ASIC’s federal court proceedings against Cbus, alleging that the superannuation fund failed to process over 10,000 death and disability claims within the required 90 days. More than 6,000 members experienced delays exceeding 12 months. Cbus has since apologized and committed to significant procedural reforms.
The ASIC review specifically examined 10 prominent superannuation funds: Australian Retirement Trust, Avanteos (Colonial First State), Brighter Super, Commonwealth Superannuation Corporation, Hesta, Hostplus, NM Super (AMP), Nulis (MLC), Rest, and UniSuper. The findings indicated that while some performed better than others, improvements were universally needed.
Cultural sensitivity lacking in claims process
The ASIC investigation revealed systemic issues regarding how superannuation funds handle claims from First Nations individuals. The report criticized the cultural insensitivity of the communication methods used, significantly contributing to longer delays and greater hardship for Indigenous claimants.
ASIC commissioner Simone Constant described many of the cases reviewed as deeply troubling, stressing the emotional toll delayed payments have on grieving families.
“Grieving Australians should not have to suffer further stress because of the failure of superannuation trustees to approach claims in a timely, clear, and respectful manner,” Constant stated. “We saw deep grief, vulnerability, frustration, and genuine suffering.”
Calls for immediate industry action
The report strongly urges trustees to prioritize reform, highlighting that timely death benefit payments can significantly mitigate financial distress during periods of profound loss. “The money from a death benefit can make a huge difference, and each day a trustee delays that payment causes real harm to families. Trustees need to do better,” Constant added.
Several funds examined in the report had previously outlined their commitment to improving processes and addressing customer concerns, acknowledging the need for urgent systemic change.
ASIC’s recommendations now await responses from the superannuation funds involved, with the industry expected to take substantial steps toward reforming claims processes to prevent future hardships.
