Super fund lobby groups have dumped a code of conduct that could have improved how funds handle life insurance claims. Consumer groups Super Consumers Australia and Financial Rights Legal Centre are calling out a self-interested move from industry lobby groups including the Australian Institute of Superannuation Trustees (AIST), the Association of Super Funds Australia (ASFA) and the Financial Services Council (FSC).
This is a joint Financial Rights Legal Centre & Super Consumers Australia media release, originally published on 1st July, 2021.
The lobby groups have today opted to reject their own code of conduct which was meant to improve how funds handle claims for consumers just a few months before they would finally be on the hook to comply.
“The Insurance in Superannuation Voluntary Code of Practice, in their own words, was the superannuation industry’s commitment to high standards when providing insurance to members of superannuation funds. Both the Productivity Commission and Banking Royal Commission recommended that this industry code become enforceable,” says Xavier O’Halloran, Director of Super Consumers Australia.
“The lobby groups have shown once again they are incapable of effective self-regulation and continue to rely on the Government to do the heavy lifting in protecting consumers. As Commissioner Hayne said, if you are going to make promises you should expect to keep them. To avoid keeping these promises the industry has instead decided to dump the code altogether.”
“Funds spent years and large amounts of members’ money developing the code and preparing for compliance only to dump it at the last minute,” says Mr O’Halloran.
Financial Rights Legal Centre Chief Executive Officer Karen Cox said it was disappointing to see the Insurance in Super Voluntary Code of Practice scrapped in favour of industry “guidance”.
“Replacing the objective of an enforceable code with a couple of ‘papers’ sends a message to consumers, governments and the public that the superannuation industry is not serious about creating and improving standards that consumers can rely on,” Ms Cox said.
“Superannuation bodies are often guilty of failures in claims handling processes that have serious detrimental impacts on clients. This includes failing to pass on consumer complaints to insurers, neglecting to provide consumers important information or documents such as claims forms or product disclosure statements. Super funds are also often responsible for delays in determining claims. And more often than not super funds do not challenge insurer decisions on behalf of consumers and act like a “PO Box” rather than a trustee.”
“What the industry needs is a robust independent monitoring of their culture through a mandatory industry wide code, reliance on current structures is insufficient to improve consumers experiences”, says Ms Cox.
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