SCT Quarterly - Q3 2018

Chairperson's welcome

Welcome to SCT Quarterly.

We're sending this quarter's edition a little earlier than usual. Why? Because the Australian Financial Complaints Authority (AFCA) will start to accept complaints this Thursday.

The Superannuation Complaints Tribunal (SCT) will accept its last complaint on Wednesday 31 October. We will then remain open to resolve our existing complaints.

In this edition of SCT Quarterly, we provide some detail about the changes you may notice if you visit our website, call us with an enquiry, or try to lodge a complaint with us on or after 1 November 2018.

On 23 October, our 2017-18 Annual Report was tabled in Parliament. We took the opportunity to reflect on more than 20 years of the Tribunal, sharing memories, key milestones and complaint data. You can access a copy of our Annual Report here, and discover more of our historical data here.

The third quarter of 2018 was a quarter of preparation for SCT. We shifted gears, undertaking recruitment and developing training programs. Although SCT will eventually close, there is still a lot of work to be done, and we want to make sure that the right people have the right tools and skills to do that work. We have welcomed ten new recruits to our team in recent months, and will continue to welcome more staff over the rest of the year.

In the third quarter of 2018, we received 655 complaints. This represented an increase of 12.9% on the quarter prior, and a 22% increase on the third quarter of 2017. We resolved 512 complaints, which represented an expected decrease on the quarter prior as we focused on recruitment and training. At 30 September, we had 2,045 open complaints.

We hope you enjoy this edition of SCT Quarterly. If you have any feedback, suggestions or queries, please send them through to us at info@sct.gov.au.

Helen Davis, Chairperson

 

Q3 2018 focus: SCT and AFCA

The role of the Superannuation Complaints Tribunal (SCT) is about to change. This week, SCT will accept its last complaint, and the Australian Financial Complaints Authority (AFCA) will start to receive complaints.

SCT’s last day of accepting complaints

SCT will accept its last complaint on Wednesday 31 October. Complaints that are lodged with SCT on or before 31 October 2018 will not be transferred to AFCA, and complaints cannot be withdrawn and then relodged with AFCA.

Any complaints received at SCT on or after 1 November will be returned to the complainant with instructions to contact AFCA.

SCT will remain open to resolve complaints received on or before 31 October 2018. We encourage trustees to continue actively working toward resolving complaints that remain open with us, and will continue communicating with trustees, insurers and complainants as our investigations progress.

AFCA’s first day of accepting complaints and SCT’s new role

AFCA will accept its first complaint on Thursday 1 November, and we will no longer accept complaints. Our website will look different, making it clear to possible complainants that we no longer accept complaints. We will display AFCA’s contact details prominently on the home page and on all pages that make reference to making a complaint.

We have developed templates and messages that will come into effect on 1 November. Our staff are well briefed on the changes, and are ready to answer queries from current complainants and to redirect possible complainants.

We have been working with AFCA on the transition, and hope to make this period as straightforward as possible for trustees, insurers and possible complainants. We released a joint statement last week, which you can access here.

 

SCT by the numbers Q3 2018

In Q3 2018, we resolved 512 complaints, a decrease of 7.1% on Q2.

Types of complaints resolved Q3 2018 - top ten

Type of complaint Percentage
Death benefit distribution 24.4
Deduction of insurance premiums 9.6
Fees and charges 5.7
Delay in transfer of benefit 4.5
Account balance 4.3
Insurance cover in dispute 3.7
Disclosure of information 3.3
TTD benefit - amount in dispute 3.3
TPD benefit - declined on medical evidence 3.1
Administration error 2.5

 

10.5% of the complaints were finalised at review stage (in other words, with a determination by the Tribunal). The remaining 89.5% of the complaints were finalised and/or resolved by our staff at various stages of the complaints process.

42.4% of finalised complaints were found to be out of jurisdiction. 22.1% of finalised complaints were withdrawn by the Tribunal, and 25% were withdrawn by the complainant.

In Q3 2018, we received 655 complaints, an increase of 12.9% on Q2.

Types of complaints received Q3 2018 - top ten

Type of complaint Percentage
Death benefit distribution 19.7
Deduction of insurance premiums 13.1
Fees and charges 7.3
Account balance 5.3
TPD benefit - declined on medical evidence 4.1
TTD benefit - amount in dispute 4.0
Disclosure of information 4.0
Failure to provide information or respond to request 2.4
Administration error 2.3
Delay in transfer of benefit 2.3
TTD benefit - declined on medical evidence 2.3

 

In Q3 2018, SCT received a further 6,620 enquiries by telephone and email, an increase of 9.3% on Q2. This followed an increase of 6.8% in Q2 compared to Q1.

 

Case study 1: Lost and found super

Full determination available here: D17-18\230 [2018] SCTA 133 (28 June 2018)

Background: The member had provided the trustee with consent to use her tax file number to search the Australian Taxation Office SuperMatch system and inform her of any additional accounts she may have held. In 2014, the trustee wrote to the member to advise that they had not found any additional accounts. In 2015, they wrote to advise that they had, and provided the member with a rollover authorisation form.

The member completed and returned the form, not recognising the name of the fund. She then realised the account was one she wished to keep open. Her financial adviser reopened the account with the second fund and reversed the transaction.

The rollover triggered capital gains tax and sell and buy fees, as well as losses on returns while out of the market, and the member sought compensation from the trustee. The trustee advised that it was not responsible for the error, but offered compensation equivalent to the capital gains tax costs as a gesture of goodwill.

Complaint: The member brought a complaint to the Tribunal, stating that she was misled by the heading of the second letter which was titled Good news – we’ve found your super for you. She stated that the letter did not adequately communicate the risks and costs of rolling over, and that it failed to take into account her personal circumstances and goals.

Further details: The trustee advised that the member had consented to using the SuperMatch system. It had offered the member the opportunity to transfer the balance of her additional account into their fund, but this would only have been actioned at her request.

The member had returned the signed form, in which the member consented to the transfer and declared that she had fully read the form, and was aware that she could ask the other superannuation fund for information about any fees or charges that may have applied.

Decision: The Tribunal determined that the member made it clear in her submission that she made a deliberate decision not to consult her financial adviser about the transfer before proceeding. The Tribunal also noted that the member had clearly consented to the transfer, and that there had been no deadlines imposed by the trustee, allowing her plenty of time to make any necessary enquiries before approving the transfer.

The Tribunal affirmed the decisions of the trustee.

 

Case study 2: Valid binding death benefit nomination

Full determination available here: D17-18\120 [2018] SCTA 21 (30 January 2018)

Background: The deceased member was 54 years old at the time of death. He was survived by five children: an adult daughter, an adult son, and three minor children (triplets). Six months prior to his death, after a diagnosis of a terminal illness, the member signed a new Will and a binding death benefit nomination (BDBN), both in favour of his adult daughter and his adult son.

Complaint: The mother of the three minor children brought a complaint to the Tribunal, seeking that the death benefit be divided equally between all five children of the deceased member. She stated that the minor children were dependants for the purposes of the fund's trust deed, and that they had been left without adequate provision for their maintenance and support.

She claimed that the BDBN was invalid as one of the witnesses to its signing was the mother of the beneficiaries, and the deceased member was subject to undue influence amounting to coercion. She also questioned whether adult children could be considered dependants.

Further details: The trustee advised that the BDBN had been reviewed and found to be valid. The trustee had confirmed the terms and effect of the BDBN to the deceased member, including the names of those nominated and the percentage to apply to each.

The adult daughter and adult son stated that the deceased member had sought to get his affairs in order upon diagnosis of the terminal illness. The deceased member had independently sourced the relevant forms and advice, and completed the changes and requests himself. They provided affidavits from medical professionals, the deceased member's solicitor, friends and family members attesting to his decision and his capacity to make it.

Decision: The Tribunal determined that a dependant of a deceased member includes a child of the deceased member, whether or not that child is under 18 years of age. The Tribunal also found that there was evidence to support the fact that the deceased member completed his BDBN free from duress or undue influence, and that there was no evidence to support the opposite.

The Tribunal affirmed the decision of the trustee.

 

Case study 3: TPD claim disagreement

Full determination available here: D18-19\028 [2018] SCTA 162 (30 August 2018)

Background: The member was certified 'legally blind' in February 2015. He held four (4) units of total and permanent disablement (TPD) default cover and six (6) units of underwritten cover, and submitted a claim for a TPD benefit in April 2015.

The member stated that he had ceased work, listing Stargardt disease and resulting legal blindness as one of the reasons. The insurer denied liability for the member’s claim on several grounds. The trustee disagreed with the insurer’s decision, believing the insurer to be liable. After several reviews of the claim by the trustee and insurer, it was referred to an external claims review process which recommended that the member’s claim for the default level of cover be accepted. There was no finding regarding the underwritten cover as it was outside of their terms of reference.

The insurer paid the default cover but decided to avoid the underwritten cover due to fraudulent misrepresentation and/or non-disclosure by the member. The trustee notified the member of the insurer’s decision.

Complaint: The member brought a complaint to the Tribunal, seeking payment of the full benefit (including underwritten cover). He stated that there was no misrepresentation and/or non-disclosure, and that he filled in the application form correctly and answered all questions truthfully.

The form contained the following question: Have you lost the sight of an eye(s) or the use of a limb(s) (limb includes the whole hand or foot) or do you have any defect of hearing?. This question requested an answer of yes or no. The member had minor issues with his sight at the time, but retained his sight at the time of completing the application for additional cover and did not have a diagnosis of a degenerative eye condition. The member stated that he had been told that the likely cause of his distortion was temporary and would improve within three months.

A report to the insurer from the member’s treating ophthalmologist made this observation: ‘Given the clinical findings even at that time it was more likely his central vision would be preserved. His condition has progressed in a way that had not been predicted by his initial presentation.’

Further details: The insurer presented the argument that the phrase ‘lost the sight of an eye’ did not limit the member to disclosing complete loss, but obliged him to disclose any experience of loss of sight or vision impairment. It stated that the intention of the question was not to limit it to blindness or complete loss of vision and so should not be interpreted that way.

The insurer also advised that, should this reading not be the interpretation of the Tribunal, the member still should have disclosed his eye-related problems. ‘In the course of completing the application, (he) was faced with a question about his eyesight (Question 3). This must have alerted (him) to the fact that defects in vision and sight were relevant…’

The trustee disagreed with the insurer and remained supportive of the member’s claim.

Decision: The Tribunal did not accept the insurer’s contention that the phrase ‘lost the sight of an eye’ prompted the member to consider all degrees of vision impairment. The Tribunal was satisfied that when the member completed the application, he answered all questions truthfully, and that there was no fraudulent misrepresentation or non-disclosure by the member.

The Tribunal set aside the insurer’s decision and substituted its own decision that the insurer pay the trustee six (6) units of underwritten cover for the member’s benefit together with interest. The trustee was then to pay the amount received to the member within a reasonable period of time.

 

Feedback and contact us

We are constantly seeking to improve our services and the information we provide to consumers, trustees and industry, and we need your feedback to do it.

If you have any feedback on this edition of SCT Quarterly, or any queries or suggestions, please email info@sct.gov.au with 'SCT Quarterly - Q3 2018' in the subject line.

Superannuation Complaints Tribunal
Melbourne VIC 3000

1300 884 114
http://www.sct.gov.au/
info@sct.gov.au