A joint media statement issued on Tuesday by Treasurer Jim Chalmers and Minister for Financial Services Stephen Jones revealed plans to open public consultations on a new series of member service standards. "The Government is ensuring that the same high standards Australians expect in investment performance also apply to member service," they announced.
Although many funds meet and even exceed community expectations, some have failed to deliver, especially during critical periods for their members. Superannuation funds hold the responsibility to support members or their beneficiaries during emotionally taxing times, making service delivery crucial to stress relief.
The new standards will prioritize several critical areas within superannuation, such as the swift processing of death benefits, efficient management of group insurance claims, and improved communication channels for members. All large super funds regulated by APRA are expected to adhere to these new standards, although specific criteria regarding fund size remain undefined.
This initiative follows legal action taken last November against Cbus by ASIC. The trustee of this major profit-to-member fund was accused of multiple failures in processing insurance claims, resulting in significant delays. Cbus estimated the delays led to $20 million in financial losses for members and claimants.
In December, AustralianSuper commenced a compensation program intended to remunerate beneficiaries whose claims exceeded the internal resolution timeline of four months. The program promises $4.2 million in compensation, covering 7000 individuals.
Research by Conexus Financial in cooperation with CoreData, relayed in _Professional Planner_, underscores the need for improved member experiences. A 2023 survey of 6900 individuals over 45 revealed dismal satisfaction rates with customer services. Retail funds scored 57.1 out of 100, while industry funds trailed with 52.1, suggesting room for improvement.
Due to increased competition and the sector's inability to solely differentiate through performance, heightened service quality is gaining importance. Public officials, such as Senator Andrew Bragg, have long criticized current insurance arrangements, labeling group life products as "junk insurance" and advocating for strict deadlines in processing claims.
There is yet no confirmation on whether the newly proposed standards by the Labor government will implement such rigid timeframes. However, Xavier O’Halloran, CEO of Super Consumers Australia, emphasizes the need for them in upcoming consultations, citing previous inconsistencies in service delivery as baffling.
Celebrating the government’s announcement, O’Halloran stated, "This announcement is a massive win for Australian consumers. Super funds have been taking far too long to do basics like pick up the phone and pay people the money they are owed." He stressed the strengthening effect of mandatory standards on the super system, boosting public confidence in their superannuation’s reliability.
Industry association ASFA (Association of Superannuation Funds of Australia) has welcomed the increased oversight, affirming that funds have been working on improving internal processes. "The work to meet these standards is ongoing, and one the sector is committed to in achieving its goal of continuous uplift in member outcomes," expressed ASFA CEO Mary Delahunty.
