Cbus chief executive Kristian Fok has blamed high staff turnover at a third-party administrator, to which it outsourced claims handling, for the super fund’s significant delay in dealing with death and disability insurance claims.
Appearing before a Senate inquiry on Thursday morning, Fok apologised to the 10,000 Cbus members – as well as their families – whose claims were delayed, with the majority of them not resolved for more than a year.
CEO of Cbus Super Kristian Fok appears via video link during a public hearing of a Senate committee on Thursday morning. Credit: AAPIMAGE
“The delays are unacceptable, but we’re not withholding money, absolutely none at all,” Fok said.
“The delays, as I indicated, have primarily emanated from our administrator. We are still responsible for it. We need to ensure as best as we can that we can rectify it, and we have been doing that. We had experience with the administrator, a large amount of turnover, and need to uplift on training; there’s been quite a lot of actions we’ve had to instigate.”
The Australian Securities and Investments Commission is suing Cbus over allegations the fund failed to identify and prevent delays that affected 10,000 members since August 2022.
Cbus entered into an agreement with Australian Administration Services (AAS) in 2020 to handle the insurance claims, according to documents filed in the Federal Court. But ASIC noted the fund was ultimately responsible under the law.
AAS was previously owned by the troubled Link Administration Holdings, but acquired by Mitsubishi UFJ Financial Group last year. Link, which was critical to super funds, lost HESTA’s outsourced administration services contract to a start-up in June 2023.
At The Australian Financial Review’s super and wealth summit last month, Cbus chairman Wayne Swan said he had raised with the regulators the “major problem” of third party administrators.
“The industry has got to have a conversation in the not-too-distant future about how we collectively deal with this challenge of a paucity of competent administrators in the field,” Swan said. “Everyone says in-source it. You cannot click your fingers and in-source some of the functions that are currently outsourced through the former Link.”
