Cbus boss apologises to Senate inquiry over delays in paying out death and insurance benefits to members

The corporate regulator has doubled down on superannuation funds, warning they’re on notice over what it sees as systemic failures in paying out death and disability insurance benefits to millions of members.

The warning came as industry superannuation giant’s chief executive Kristian Fok apologised for his group’s failings when he fronted a Senate inquiry, promising “to do better”.

The deputy chair of the Australian Securities and Investments Commission said bad services was rife across the superannuation service and flagged that it would superannuation fund directors to the same standards demanded of company directors.

“ASIC’s view is that the directors that sit around superannuation trustee boards are no different to those that do the same at other companies,” Ms Court said.

Cbus is facing regulatory and political pressure, with ASIC this week launching action in the Federal Court over alleged delays in paying out on more than 10,000 disability and death benefit claims, and the Federal Opposition scrutinising the fund’s links to the CFMEU.

The ASIC lawsuit says thousands of members were left out of pocket, with more than half the claims, which date back to September 2022, still unresolved within a year of being made. Only 11 per cent were processed within the 90-day deadline imposed by law, it says.

“We are committed to do better, and we will,” Mr Fok told an inquiry into the retirement system by the Senate’s economics reference committee in Canberra.

However, he reiterated that Cbus had taken action to reduce the delays, which he blamed on the fund’s administrator, Link, adding that most of the claims that were the subject of the ASIC action had been resolved and compensation was being paid to affected members.

“Like many institutions experiencing rapid growth, it has taken time for Cbus to mature and attract the right personnel to meet our needs,” he said.

“Whilst we have been far from perfect, our board and our team did take action to reduce delays, and many of those actions have resulted in marked improvements.”

Mr Fok noted the impact of the delays had been particularly hard give that many of Cbus’ 920,000 members worked in the construction industry, “in high risk jobs where injury or death are more common”.

“We acknowledge that delays in processing claims can add to their stress at a difficult time,” he said.

Mr Fok also defended the fund’s relationship with the CFMEU, whose construction and general division was put into administration in August amid allegations it had been infiltrated by underworld and bikie figures.

Most of the money paid by Cbus to the union, he said, went on directors’ fees and partnership programs that generated major benefits to the fund.

“There is a huge benefit and a strong reason for us to reach out to people in the construction industry around the issues that are relevant in terms of our differentiated product,” Mr Fok said. This included ensuring that at-risk workers in the sector were covered by insurance.

“We do believe that there is incredible value in that relationship.

“Cbus will make commercial arrangements which we believe are in our members’ best interests.

“If if that continues to be a value driver, then we would expect that (a relationship with the CFMEU) would be something we would continue to pursue.”