Cbus sued for payout delays
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ASIC is suing Cbus for delays that left grieving families waiting for payouts.
The Australian Securities and Investments Commission (ASIC) has initiated Federal Court proceedings against the trustee of the Construction and Building Unions Superannuation Fund (Cbus), alleging widespread delays in the processing of death benefits and total and permanent disability (TPD) insurance claims.
ASIC says these delays affected over 10,000 members and claimants between September 2022 and November 2024, with financial losses estimated at $20 million.
Of those impacted, more than 6,000 claimants experienced delays exceeding 12 months. In some cases, ASIC claims that Cbus has yet to fully address the outstanding issues.
ASIC’s case focuses on allegations of systemic failings by United Super Pty Ltd, the trustee of Cbus, in handling insurance claims.
Despite receiving reports from its third-party administrator, Australian Administration Services Pty Ltd (AAS), United Super allegedly failed to fully assess the scale of the delays or take adequate steps to mitigate the impact on members.
When a response was finally initiated in late 2022, ASIC argues it was “inadequate and insufficient” to resolve the problem.
Additionally, the trustee is accused of failing to report the matter to ASIC within 30 days as required by law, despite its Risk Committee being aware of the situation by November 2022.
United Super’s eventual reports to ASIC in August and September 2023 were allegedly misleading, claiming that the breaches were no longer ongoing.
ASIC alleges contraventions of several sections of the Corporations Act, including failing to act efficiently, honestly, and fairly (s 912A), failing to lodge timely reportable situation reports (s 912DAA), and lodging reports that were materially misleading (s 1308).
ASIC Deputy Chair Sarah Court says the alleged behaviour has taken a profound financial and emotional toll on families reliant on these payments.
“Delays in claims processing like those alleged by ASIC cause real harm to families who may be relying on the payments to meet critical expenses,” she said.
“This adds to difficult personal circumstances, whether grieving for a loved one or dealing with severe injury or illness.
“We allege Cbus failed its members and claimants at their most vulnerable time, and we are taking this case to protect all those vulnerable Australians trying to access the financial support to which they are entitled.”
ASIC has indicated that other superannuation funds may face scrutiny, as delays in processing insurance claims appear to be widespread across the sector.
A detailed report on these issues is expected in early 2025.
Cbus has apologised for the delays, confirming the establishment of a compensation program and pledging to improve its claims handling processes.
CEO Kristian Fok admitted to a Senate committee last week that the fund’s performance had been “far from perfect”. He attributed the delays to high staff turnover at AAS, the fund’s administrative provider.
“We have experienced delays that are unacceptable, but we are not withholding money,” Mr Fok stated.
In addition to its apology, Cbus says that it has implemented measures to reduce delays and improve the member experience, although the fund continues to face criticism over its governance and accountability.
The case is part of a broader examination of the $3.9 trillion superannuation industry. ASIC has emphasised that trustees cannot outsource accountability and must maintain adequate oversight of their administrative partners.
ASIC is seeking penalties, declarations, compliance orders, and adverse publicity orders against Cbus.
The case is expected to test the regulator’s ability to hold trustees accountable for their obligations under the Corporations Act.
