Superannuation giant Cbus has admitted it breached corporate law and agreed it should pay a $23.5 million fine in its bid to settle a landmark case over major delays in its handling of insurance claims.
In a case that put the super industry on notice, the Australian Securities and Investments Commission (ASIC) last year took Cbus to court, alleging “systemic” failures in its handling of death benefits and total and permanent disability insurance claims.
Former treasurer Wayne Swan is chair of the super giant Cbus, which has agreed to a $23.5 million fine.Credit: Alex Ellinghausen
Cbus and ASIC on Tuesday night filed documents with the Federal Court, saying the two sides had agreed to a $23.5 million penalty for the fund, which also admitted to breaches of corporate law. Cbus also estimated it would pay out $32 million in compensation to 7,402 people, in response to its problems with claims handling.
If the proposed fine is approved by the Federal Court, it would bring to a close a major case that has been part of a wider push by ASIC to improve the super industry’s customer service.
Cbus, which is chaired by former Labor treasurer Wayne Swan, holds more than $100 billion in members’ funds and is Australia’s ninth-largest fund.
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The statement of agreed facts says the fund’s conduct caused financial harm to people claiming money from their fund and their beneficiaries, which meant that some people were unable to meet their mortgage or rent payments. Others had to draw down on their savings to pay their bills, or seek alternative sources of funding such as borrowing money from friends or family or redrawing against their mortgage.
It also said CBUS’s conduct caused people to “suffer emotional distress at a difficult time in their lives,” including due to financial hardship, or the uncertainty that arose because of delays in payouts being made.
As well as proposing a $23.5 million fine, the agreed statement of facts also seeks orders for the super fund to pay the regulator’s legal costs of $500,000, and declarations that the fund breached a duty to provide financial services efficiently, honestly and fairly.
