Superannuation complaints

Between 1 July 2021 and 30 June 2022

5,286 complaints received

33% resolved at Registration and Referral stage

Superannuation complaints received

Percentage of superannuation complaints resolved at Registration and Referral stage

Top five superannuation complaints received by product

Product	2018–19 ¹	2019–20	2020–21	2021–22
Superannuation account	1,680	3,723	2,717	3,009
Total and permanent disability	674	1,161	978	1,014
Income protection	322	925	833	795
Death benefit	364	578	453	457
Pension	70	58	52	77

Top five superannuation complaints received by issue

Issue	2018–19 ¹	2019–20	2020–21	2021–22
Service quality	183	648	517	774
Delay in claims handling	463	1260	856	737
Account administration error	299	570	487	506
Denial of claim	251	556	517	438
Claim amount	262	427	362	342

¹AFCA commenced on 1 November 2018. The 2018–19 financial year covers an 8-month period (from 1 Nov 2018 to 30 Jun 2019). Year-on-year changes between 18–19 and 19–20 have been calculated pro rata using monthly averages.

5,181 complaints closed

Average time to close a complaint 123 days

Superannuation complaints closed

Average time to close a superannuation complaint in days

Stage at which superannuation complaints closed

Stage	2018–19 ¹	2019–20	2020–21	2021–22
At Registration	960	2,476	2,052	1,714
At Case Management	793	2,830	2,466	2,084
At Rules Review	241	254	168	177
Preliminary Assessment	140	816	909	613
Decision	45	491	619	593

Average time taken to close superannuation complaints

Time	2018–19 ¹	2019–20	2020–21	2021–22
Closed in 0–30 days	454	1,117	770	681
Closed in 31–60 days	675	1,285	1,363	1,342
Closed in 61–180 days	1,009	3,355	3,051	2,096
Closed in 181–365 days	41	1,013	762	636
Closed in in more than 365 days	0	97	268	426

¹AFCA commenced on 1 November 2018. The 2018–19 financial year covers an 8-month period (from 1 Nov 2018 to 30 Jun 2019). Year-on-year changes between 18–19 and 19–20 have been calculated pro rata using monthly averages.

AFCA can consider complaints about the following superannuation products:

superannuation pensions and annuities
corporate, industry and retail super funds
some public sector schemes
self-managed super funds (handled under our investments and advice jurisdiction)
approved deposit funds
retirement savings accounts
small APRA funds.

The types of issues and problems AFCA resolves include:

advice given about a superannuation product
fees or costs that were incorrectly charged or calculated
misleading or incorrect information – for example, if benefit statements are incorrect
information not being provided about a product, including fees or costs
decisions a superannuation provider has made, including decisions about an application for insurance held through superannuation
decisions about a total and permanent disability or income protection claim, including where the claim involves insurance cover held through the superannuation fund
cancellation of insurance cover
payment of a death benefit
an unreasonable delay in paying a benefit
if a complainant gave instructions and they weren’t followed
transactions that were incorrect, unauthorised or took too long.

Key insights:

Superannuation funds are continuing to see complaints about the administration of accounts, insurance cover and the allocation of death benefits.
Fund members find the complexity of the superannuation system and its regulation challenging, and have high expectations of their funds in terms of the support they will provide.

AFCA received 5,286 superannuation complaints during the 2021–22 financial year, which was around 7% of the total complaints received by AFCA. This is consistent with the number of superannuation complaints received last year.

Of the superannuation complaints received, 3,009 were about superannuation accounts. This included complaints about:

charging premiums the complainant believes were incorrectly applied to their account or were not disclosed
delays in rollovers
the transfer of inactive accounts to the ATO
errors made in implementing investment switches
the cancellation of insurance cover
the calculation of fees and charges
eligibility for pensions
incorrect processing of tax-related forms and elections.

The second most common super product complained about in 2021–22 was total and permanent disability insurance, with 1,014 complaints. The third most common super product complained about was income protection insurance, with 795 complaints. These insurance-related complaints are often complex and involve detailed medical records and other sensitive information.

In determining these disputes, AFCA often convenes a panel composed of an ombudsman, and an industry and consumer representative. AFCA may also seek the expertise of a specialist medical professional to assist in the assessment of competing medical reports.

Complaints about death benefits were the fourth most common category, with 457 complaints.

The most common issues for superannuation complaints in 2021–22 were service quality (774) and delays in claim handling (737).

Of the superannuation complaints closed, 1,714 were closed at Registration and Referral, 2,084 were closed at Case Management and 593 progressed through to a final decision.

Superannuation complaints often take longer to resolve than other complaints because of their complexity and the longer 45-day period trustees have to resolve the complaint at the Registration and Referral stage (90 days for death benefit distribution complaints). This varies from the 30 days allowed for most other types of complaints AFCA receives.

Common themes AFCA is currently seeing in superannuation complaints include:

claims for total and permanent disability, income protection or death benefits where the trustee says there was no cover in place
total and permanent disability and income protection claims where the insurer says the complainant failed to disclose relevant medical history
disputes about the pre-disability income that should be accepted by the insurer in income protection claims
cancellation of insurance due to the operation of Protecting Your Super or Putting Members’ Interests First legislation, or where there were not enough funds in the account to pay premiums, where the complainant says the trustee failed to warn them adequately
complaints about the trustee’s management of investment switch requests, particularly during periods of market volatility.

Many superannuation complaints involve issues about disclosure and communication by trustees. Even in cases where AFCA is satisfied the member was given relevant information, we can often see that the complaint may have been avoided or resolved more readily if the communication had been more clearly written, was timely or delivered in a different way. AFCA is sharing learnings from these observations with the industry through our stakeholder engagement program.

Case study

Background

This complaint was about the trustee’s decision to distribute a death benefit to the deceased’s mother. This decision was based on the mother being in an interdependency relationship with the deceased fund member.

The complainant was the deceased’s legal spouse, and he and the deceased were separated. He said the separation was temporary, and that he should receive the deceased’s superannuation as her spouse. He disputed that the mother, who was joined to the complaint, was in an interdependency relationship with the deceased.

The trustee said its decision to pay the mother was consistent with the purpose of superannuation as she was in an interdependency relationship with the deceased and was, therefore, a dependant.

While acknowledging the complainant was the legal spouse, the trustee said it was satisfied the deceased and complainant had separated and there was no evidence of any potential reconciliation, or that he was financially dependent on the deceased.

There was evidence to establish the mother was in an interdependency relationship with the deceased as they lived together, and the deceased provided care to her.

There was also a level of financial interdependence, as the mother had invested in the home she and the deceased shared and contributed towards household expenses. The mother had an expectation that she would always remain living with the deceased.

Findings and outcome

The decision maker set aside the trustee’s decision for the following reasons:

While it was accepted the mother was in an interdependency relationship with the deceased, the decision to pay the whole of the death benefit to her did not give adequate consideration to the complainant’s position as legal spouse and the expectations arising from the likely outcome of a financial settlement.
Although divorce proceedings had not commenced, there was evidence to support that the deceased had started to explore a financial settlement.

The substituted decision was that the death benefit be paid 60% to the mother and 40% to the complainant.

The mother was awarded a higher percentage on the basis that the interdependency relationship would have continued beyond the finalisation of the deceased’s financial relationship with the complainant.

Case studies are used to demonstrate AFCA’s approach to an issue and have been simplified for length and clarity.

Case study

Background

This complaint was about the cancellation of the complainant’s total and permanent disability and death insurance cover held with the fund. When the complainant joined the fund in April 2019, he received automatic total and permanent disability and death insurance cover.

In November 2019, the complainant messaged the fund to say he would like to cancel his automatic cover and asked how to formalise this. In August 2020, the complainant asked the trustee to confirm the amount of insurance cover he held, but the trustee did not respond.

In December 2020, the trustee wrote to the complainant to say it had cancelled the complainant’s automatic cover (effective November 2019) and had refunded premiums to his superannuation account. The insurance policy issued by the insurer to the trustee included a term saying that insurance cover ceased when a written request was received to cancel the cover.

The complainant brought a complaint to AFCA because he said his online enquiry was not an instruction to cancel his insurance and he wanted his insurance reinstated. The trustee said it had approached the insurer (which was not a party to the complaint), but it had declined to reinstate the complainant’s insurance.

Findings and outcome

In the determination, AFCA found that the relevant term of the policy must be fairly interpreted to require a proper and valid request from the trustee to cancel a member’s cover. This is because a duty of utmost good faith applies to all aspects of the relationship between the insurer, the trustee and the complainant.

It would not be consistent with the duty of utmost good faith for a trustee to cancel a member’s insurance cover invalidly, or for an insurer to act on an invalid request.

AFCA found the trustee’s request to the insurer to cancel the complainant’s insurance cover was neither properly nor validly made because:

even if the complainant’s online message in November 2019 was considered an instruction to cancel his cover, the trustee delayed actioning it for over 12 months
in the meantime, the trustee issued communications to the complainant to the effect he had cover in place
the complainant asked the trustee in August 2020 to confirm his insurance cover was active
the trustee did not follow its own business rules in cancelling the cover.

In the determination, AFCA found the trustee’s decision was not fair and reasonable in its operation in relation to the complainant in all the circumstances, and the appropriate remedy was for the trustee to acknowledge it did not properly cancel the complainant’s insurance and to procure a reinstatement of the cover from the insurer.

Case studies are used to demonstrate AFCA’s approach to an issue and have been simplified for length and clarity.

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Annual Review 2021–22

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