Superannuation funds are 'fiduciaries first, marketers second': SCT
Superannuation funds must ensure they are "fiduciaries first and marketers second", according to Superannuation Complaints Tribunal (SCT) chair Jocelyn Furlan.
Speaking at the Association of Superannuation Funds of Australia Compliance Summit in Sydney, Furlan cited a recent SCT determination in which a super fund had engaged in misleading correspondence.
The complainant received a letter that promised "Better insurance, lower premiums" in bold at the top of the correspondence. It went on to promise better insurance coverage and lower premiums "for most members".
The fund in question had increased its total and permanent disability (TPD) coverage and introduced bulk, opt-out salary continuance coverage for members as of 1 July 2011.
The complainant saw her TPD premium increase from $25 to $40 a month, in addition to her new salary continuance premium of $34 a month - taking her total premium from $25 to $74.
"[The complainant] said that when the fund wrote to her they were well aware that they were more than doubling the premiums payable, and should have included this information in the letter to her. Instead, she said, it chose to omit this information and actively mislead her," said Furlan.
Furlan said the trustee's claims that "most people" would pay less premiums was "perhaps misleading".
"Because the fund was introducing salary continuance coverage for the first time, it must have been increasing premiums - for all members - in relation to the salary continuance component," said Furlan.
Because the details of the letter did in fact contain the correct premiums for the complainant, the SCT did not find in her favour.
However, Furlan added: "We're getting a lot of complaints about this and I think some of them are actually about poor practice".
"I would encourage trustees to think about what 12 per cent [superannuation guarantee] might mean in terms of your fiduciary obligations and the fact that the average account balance is rising all the time, and what that means about the quality of communication you have with them," she said.
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