Australia’s corporate watchdog has delivered the superannuation sector a warning after a major fund was forced to pay a $23.5m fine over “unacceptable” conduct.
Construction sector fund Cbus, which is chaired by Rudd-Gillard era treasurer and ALP president Wayne Swan, was given just 28 days to pay its fine worth tens of millions of dollars.
This follows the superannuation fund being sued by the Australian Securities and Investments Commission for delays when paying death and disability claims.
The corporate watchdog is also suing the nation’s largest super fund AustralianSuper for delayed processing of almost 7000 death benefit claims.
ASIC chair Joe Longo said its pursuit of superannuation funds over death claims should come as a warning to the sector.
“This is an ongoing priority for ASIC. We have ongoing proceedings against AustralianSuper that were commenced earlier this year, raising similar issues,” Mr Longo told Business Now.
“You can expect ASIC to continue to be pressing the superannuation sector to put front and centre the services they provide and the interactions that they have with their members.
“Cbus happened yesterday, but you can expect ASIC to take a continued interest in this matter, in this situation, and AustralianSuper is the next matter that we’ll be dealing with.”
ASIC alleges between July 1, 2019, and October 18, 2024 AustralianSuper took anywhere from four months to four years to assess at least 6,897 death benefit claims from their date of return.
The corporate watchdog alleges for at least 752 cases, AustralianSuper failed to pay benefits “as soon as practicable” after a member’s death.
Meanwhile, Cbus was slapped with its hefty fine after it was found to have failed to meet its members’ needs during stressful times.
Justice O’Callaghan, when handing down his sentence on the Cbus case, said these delays can have “serious and unacceptable consequences for affected members and claimants”.
“The penalties awarded in this case need to be significant enough to send a clear deterrent message to dissuade other superannuation fund trustees, and other Australian financial services licensees generally, from failing to discharge their duties diligently by providing financial services efficiently, honestly and fairly,” he said.
Alongside the large penalty, Cbus will also pay $32 million in compensation to 7,402 claimants or beneficiaries whose claims were not processed within a reasonable timeframe.
The super fund also has to publish a notice on its website about the fund’s activity.
Cbus said it has established reserves to pay the penalty and has compensated its impacted members.
“We want to again apologise to our members, families and claimants without reservation and promise to do better,” a statement on Cbus’ website says.
“Cbus has now paid compensation to almost all affected members, their families and claimants.”
It also said it has doubled the size of its claims team and formed specialist units to manage claims “more efficiently and empathetically”.
“The Fund has announced further significant reforms to its insurance claims process, which are expected to remove 4–6 weeks from processing times for the average death claim and deliver a simpler, more compassionate experience for families,” Cbus said.
“A new simplified insurance payment process for death benefit payments will also commence from next Monday (1 December 2025).”
The fund said it manages more than $105b as of June 30 and had about 914,000 members with a balance at the time.