Annual Review 2022–23
Contents
- About this Annual Review
- Year at a glance
- Acknowledgement of country
- Board Chair message
- Chief Executive Officer and Chief Ombudsman message
- Organisational overview
- AFCA Independent Review
- Complaints
- Who complained to AFCA?
- Overview of complaints
- Open cases
- Closed cases
- Banking and finance complaints
- Buy now pay later
- Scam complaints
- Financial difficulty complaints
- Small business complaints
- General insurance complaints
- Significant events
- Life insurance complaints
- Superannuation complaints
- Investments and advice complaints
- Cryptocurrency
- Complaints lodged by Aboriginal and Torres Strait Islander peoples
- Complaints lodged by consumer advocates and financial counsellors
- Complaints lodged by paid representatives
- Complaints outside AFCA’s Rules
- AFCA’s Systemic Issues function
- AFCA’s Code compliance and monitoring functiong
- Engagement, awareness and accessibility
- Corporate information
- AFCA General Purpose Financial Report
- Glossary
Between 1 July 2022 and 30 June 2023
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 |
2022–23 |
---|---|---|---|---|---|
Superannuation account |
1,680 |
3,723 |
2,717 |
3,009 |
4,369 |
Total and permanent disability |
674 |
1,161 |
978 |
1,014 |
985 |
Income protection |
322 |
925 |
833 |
795 |
949 |
Death benefit |
364 |
578 |
453 |
457 |
599 |
Pension |
70 |
58 |
52 |
77 |
97 |
Top five superannuation complaints received by issue
Issue |
2018–19 ¹ |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
---|---|---|---|---|---|
Delay in claim handling |
463 |
1,260 |
856 |
737 |
1,738 |
Service quality |
183 |
648 |
517 |
774 |
767 |
Account administration error |
299 |
570 |
487 |
506 |
709 |
Incorrect fees/costs |
568 |
753 |
419 |
335 |
397 |
Failure to follow instructions/agreement |
189 |
375 |
227 |
302 |
337 |
Superannuation complaints closed
Average time to close a superannuation complaint in days ²
Stage at which superannuation complaints closed
Stage |
2018–19 ¹ |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
---|---|---|---|---|---|
At Registration |
960 |
2,476 |
2,052 |
1,714 |
2,592 |
At Case Management |
793 |
2,830 |
2,466 |
2,084 |
2,452 |
At Rules Review |
241 |
254 |
168 |
177 |
190 |
Preliminary Assessment |
140 |
816 |
909 |
613 |
496 |
Decision |
45 |
491 |
619 |
593 |
412 |
Time taken to close superannuation complaints
Time |
2018–19 ¹ |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
---|---|---|---|---|---|
Closed in 0–30 days |
454 |
1,117 |
770 |
681 |
819 |
Closed in 31–60 days |
675 |
1,285 |
1,363 |
1,342 |
1,966 |
Closed in 61–180 days |
1,009 |
3,355 |
3,051 |
2,096 |
2,331 |
Closed in 181–365 days |
41 |
1,013 |
762 |
636 |
794 |
Closed in in more than 365 days |
0 |
97 |
268 |
426 |
232 |
¹ AFCA 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 2018–19 and 2019–20 have been calculated pro rata using monthly averages.
² This excludes complaints that were inactive for an extended period, for example complaints that were paused because the financial firm was insolvent or due to court proceedings, and complaints that were previously closed and re-opened.
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 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
- Many superannuation complaints to AFCA can be traced back to issues with service quality, including the clarity and usefulness of communications, the timeliness and effectiveness of internal dispute resolution processes, and the responsiveness of the trustee when questions are raised.
- Complaints about delays in handling insured benefit claims in superannuation soared in 2022–23, by 136% over the previous year. While these complaints mainly related to total and permanent disability and income protection claims, AFCA is also receiving increasing numbers of complaints about delays with the finalisation and payment of death benefits.
AFCA received 6,957 superannuation complaints in 2022–23, an increase of 32% over the previous year and about 7% of total complaints to AFCA.
The most common type of superannuation complaint was about the administration of accounts with a total of 4,369 complaints, up from 3,009 in 2021–22. Account administration complaints cover a wide range of issues, including:
- delays with rollovers and withdrawals
- failure to consolidate duplicate accounts
- transfer of inactive accounts to the Australian Taxation Office
- errors in implementing investment switches
- errors with the allocation of funds between investment options
- difficulty in accessing online member services
- cancellation of insurance cover
- calculation of fees and charges
- eligibility for pensions
- incorrect processing of tax-related forms and elections.
The second most common type of complaint was about total and permanent disability insurance, with 985 complaints. While the third most common related to income protection insurance with 949 complaints. These insurance-related complaints often involve complex issues, including questions of eligibility for cover, delays in claim decisions, avoidance of cover by insurers, and assessment of detailed medical records and other sensitive information.
Complaints about death benefits were the fourth most common category, with 599 complaints. These complaints included issues about:
- identification of dependants
- allocation of the death benefit
- the validity of binding or non-lapsing nominations
- delays in death benefit distribution decisions
- insured death cover.
Of the superannuation complaints closed, 2,592 were closed at the Registration and Referral stage. The high level of complaints closed at this early stage indicates superannuation funds are working hard to resolve matters before they progress further through the AFCA process. It equally suggests there is an opportunity for more complaints to be resolved through IDR.
A further 2,948 complaints were closed at Case Management stage, including after the issue of a Preliminary Assessment, and 412 progressed through to a final Decision.
Superannuation complaints often take longer to resolve than other complaints. This is due to their complexity and the longer 45-day period trustees have to resolve the complaint at the Registration and Referral stage (which extends to 90 days for death benefit distribution complaints). This compares to the 30 days allowed for most other types of complaints to AFCA.
Common recent themes in superannuation complaints include:
- delays with the handling of claims for insured benefits
- insurance eligibility issues, including where the trustee says there was no cover in place, or there was no cover for pre-existing conditions
- total and permanent disability and income protection claims where the insurer says the complainant has misrepresented their medical history
- disputes about pre-disability income levels in income protection claims
- cancellation of insurance cover due to the operation of Protecting Your Super or Putting Members’ Interests First legislation, or where there are insufficient funds in the account to pay premiums, or where the complainant says the trustee failed to warn them adequately
- issues arising from intra-fund transfers or fund mergers.
Case study – Cancelled policy following Protecting Your Super legislation
Background
This case involved the cancellation of a deceased fund member’s insurance under the Protecting Your Super legislation.
The trustee had identified the deceased as a member whose account had been inactive for 16 months or more and sent him a notice under section 68AAA of the Superannuation Industry (Supervision) Act 1993 (Cth). That provision required the trustee to ensure it only provided insurance to such inactive members where they had elected to maintain cover, and to send those members a notice inviting them to do so. The notice gave the deceased a deadline to notify the trustee if he wanted cover to continue and included an election form.
When the deadline passed, the trustee had not received an election form from the deceased and the account remained inactive. On that basis, the trustee decided to cancel the insurance.
When the deceased subsequently died, the trustee did not pay the death benefit that would have been payable if cover had been maintained.
The complainant – the legal personal representative of the deceased – complained to AFCA about the trustee’s failure to pay. He said the deceased signed and sent a form electing to maintain the cover. The complainant provided a copy of the form, which he said was sent, and an affidavit from a person who said they had seen the deceased post the form.
Findings and outcome
AFCA affirmed the trustee’s decision.
Based on the complainant’s evidence, the ombudsman was satisfied, on balance, that the deceased completed and sent the election form to the trustee.
However, based on the trustee’s evidence of its routine for dealing with incoming post and the trustee’s review of its systems, the ombudsman accepted the trustee did not receive the form. The ombudsman determined the trustee was required by law to cancel the insurance cover and that the trustee’s decision not to compromise the complainant’s claim by paying him (as legal personal representative) an amount equal to the insured death benefit was fair and reasonable in all the circumstances.
This case demonstrates how AFCA may assess whether a trustee decision has been fair and reasonable, considering their legal obligations to members of the fund.
Case study – Addressing TPD claim delay
Background
This case concerned delays in the payment of a claim for total and permanent disability (TPD) under cover held through the complainant’s superannuation fund.
The complainant lodged a TPD claim with the trustee on 24 May 2018, for symptoms relating to multiple sclerosis. The insurer accepted the claim on 29 May 2019 and notified the trustee.
The trustee and the insurer accepted there had been delays in the claim handling. The insurer decided to pay interest to compensate the complainant for the delay period starting on 1 April 2019. This was 10 business days after the insurer received a report from an independent neurologist, which confirmed the complainant satisfied the policy requirements.
The complainant was dissatisfied. She said the insurer and the trustee caused unreasonable delays and should have been able to pay the claim based on the information and medical evidence she provided when she first lodged her benefit claim.
Findings and outcome
The ombudsman found the insurer had caused unreasonable delay by failing to seek further necessary information in a reasonable timeframe. The ombudsman required the insurer to pay further interest from 10 January 2019. The ombudsman also found the trustee’s decision to agree with the insurer’s payment of interest was not fair and reasonable.
In reaching these conclusions, the ombudsman noted that:
- medical evidence provided with the initial claim was ambiguous and the insurer was, therefore, justified in not initially accepting the claim
- when the insurer sought clarification from the complainant’s neurologist, the neurologist advised there would be significant delays
- the insurer took more than two months to approach another independent neurologist to assess the complainant, which delayed the claim
- had the insurer not delayed in seeking the additional medical evidence it required, it would have been able to accept the claim more than two months earlier.
This case shows that insurers should be willing and timely in reconsidering their claims approach if a key piece of information is not forthcoming. Trustees should also be seeking explanations from an insurer if there are any delays during the claim process.