SCT Quarterly - Q1 2019

Chairperson's welcome

Welcome to SCT Quarterly.

The Superannuation Complaints Tribunal continues its work, focusing on resolving open complaints throughout 2019 and 2020. We resolved 354 complaints in Q1 2019, leaving 1,585 open complaints at 31 March.

We had some changes to our Advisory Council this quarter, with Michael Dwyer and Pam McAlister resigning (in Pam’s case, to rejoin the Tribunal as a part time member) and Deanne Stewart accepting an invitation to join. We thank both Michael and Pam for their contributions to the Advisory Council, and welcome Deanne on board.

At the end of the quarter, our part time members attended a conference at the Tribunal’s offices in preparation for the expected increase in reviews. Members discussed recent court cases and shared their learnings as a group, as well as hearing more about the current work of the Tribunal from members of staff.

Not long after this, Budget 2019-20 was handed down. The government announced that it will provide an additional $2.3 million to the Australian Securities and Investments Commission (ASIC) for the Tribunal to resolve outstanding complaints by 31 December 2020. This follows the delayed commencement of the Australian Financial Complaints Authority, and will allow A­­­­SIC to manage the closure of the Tribunal.

You’ll notice a new-look SCT by the numbers section this quarter. This is our first full quarter of not accepting new complaints, so we are providing more detailed numbers about the complaints we’re closing, the categories they fit into, and the decisions made for those complaints that are heard at review.

We still have a lot of work to do at the Tribunal. Last quarter, we wrote about our recruitment and onboarding activities. We now have more staff undertaking preliminary investigations and complaint resolution. We encourage trustees to continue engaging with us and with their open complaints, and to ensure they have the resources available to manage their internal and escalated 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

 

SCT by the numbers Q1 2019

At 31 March 2019, we had 1,585 open complaints. We are working to resolve them throughout 2019 and 2020.

In Q1 2019, we resolved 354 complaints, a decrease of 23.0% on Q4 2018. This decrease was due to the ongoing onboarding of new starters, the introduction of new processes and related training, and a focus on preliminary investigations (including the issuing of s17 notices, which will continue throughout the second quarter).

Types of complaints resolved Q1 2019 - top ten

Type of complaint Percentage
Death benefit distribution 30.8
Deduction of insurance premiums 12.7
Account balance 8.5
Fees and charges 6.5
TPD benefit - declined on medical evidence 4.0
TTD benefit - amount in dispute 4.0
TPD benefit - delay in making a decision 2.8
Death benefit - insurance cover in dispute 2.0
TPD benefit - amount in dispute 1.7
TTD benefit - delay in making a decision 1.7
Failure to provide information or provide a response 1.7

 

9.6% of resolved complaints were found to be out of jurisdiction. All complaints have now progressed through the initial assessment of jurisdiction. While complaints can be assessed as being out of jurisdiction at any time in the complaint process, we expect this percentage to remain near zero for the rest of the Tribunal’s operation.

15.9% of resolved complaints were finalised at review stage. As we continue to resolve complaints and the more complicated and/or contentious complaints remain, we expect this number to increase. Of the determinations issued, 84% affirmed the decision of the trustee, 14.3% set aside the decision and substituted a new decision, and 1.8% varied the decision.

26.3% of resolved complaints were withdrawn by the Tribunal once they were satisfied that the complainant did not wish to proceed. An additional 10.5% were withdrawn by the Tribunal as either lacking in substance, misconceived or trivial, or for other reasons (including failure of the complainant to attend a conciliation conference).

37.9% of resolved complaints were withdrawn by the complainant.

 

Case study 1: When is an income protection benefit payable?

Full determination available here: D18-19\106 [2018] SCTA 239 (20 December 2018)

Background: The member was diagnosed with Non-Hodgkin lymphoma in 2013. She ceased work on 20 December 2013 and commenced sick leave. She called the trustee with questions about income protection (IP) in January 2014, and lodged an application for an IP benefit on 16 September 2014.

The trustee accepted the claim, determining the date of disability to be 28 November 2013, and paid the IP benefit from the end of the 90-day waiting period. The benefit was reduced by the level of sick leave in line with the policy.

Complaint: The member brought a complaint to the Tribunal, seeking that the trustee and insurer agree that the date of disability should be 20 December 2013, being the date the member ceased work, and seeking that payment of the benefit start at the date of claim rather than the end of the 90-day waiting period so that it was not reduced by the amount paid in sick leave.

She noted that an information sheet titled How to Make an Income Protection Benefit Claim led her to believe that a claim for IP benefits could be made at any time after the conclusion of the waiting period. Combined with the statement that sick leave payments reduce the value of the IP benefits, she formed the view that it was not in her interest to make a claim until her paid sick leave entitlements had been almost exhausted.

The member stated that she had twice called the trustee to understand how income protection benefits work, that she declared her intention to take sick leave, and that she was not informed that the benefit period would commence immediately following the waiting period. Had she realised accessing sick leave would result in a diminished income protection payment, she would instead have taken leave without pay.

Further details: The trustee advised that entitlement to an income protection benefit is triggered by a single event. The policy provides that a benefit is payable from the date the waiting period expired, regardless of the date of claim.

The trustee stated that, just as lodging a claim early would not bring forward the entitlement to the benefit, lodging a claim late would not delay the start of the benefit and the payment period. Where a claim is lodged late, it is backpaid to the date following the end of the waiting period.

The trustee disputed that their staff had misrepresented this to the member on the phone, stating that their call centre provided general product advice. The transcripts showed that the member did not detail her plan to delay the claim until her sick leave had ceased. ‘Had the claimant wanted to know what the impact of lodging the claim late would be, it would have been appropriate… to ask the direct question.’

During the investigation into the complaint, the trustee and insurer agreed that the date of disability was 20 December 2013 and paid the balance of the amount due to the member resulting from this revised date. The issue of sick leave affecting the amount of the benefit was the sole matter before the Tribunal at review.

Decision: The Tribunal determined that the member was not given incorrect or incomplete information that led her to take action to her detriment. The information provided was general in nature, and she was encouraged to make her application within the waiting period.

The Tribunal was also of the view that even if the member’s employer had allowed leave without pay, her monthly benefit would still have been reduced by her sick leave entitlement, as per the definition of ‘other disability income’ in the policy.

The Tribunal also made a general observation that the complaint could have been avoided if the member had been provided with greater clarity about the application of the policy.

The Tribunal affirmed the decision of the trustee.

 

Case study 2: How is the total and permanent disablement cover communicated?

Full determination available here: D18-19\091 [2018] SCTA 224 (5 December 2018)

Background: The member was diagnosed with metastatic thyroid cancer, and subsequently lodged a claim for total and permanent disablement (TPD) with the trustee. The member had casual employment at the time.

The trustee reviewed the claim and established that the member had left full-time employment some five years prior. Once the trustee applied the employment termination date to the member’s account, it found that she had no TPD cover. The trustee declined the claim and refunded the premiums to the member’s account.

Complaint: The member brought a complaint to the Tribunal, seeking that the trustee and insurer reinstate her insurance cover and accept the claim, or that the trustee compromise the claim for the same amount.

The member stated that her benefit statements had listed insurance cover. Her latest benefit statement had listed TPD cover of $64,500 and insurance premiums in respect of same being deducted. She had never been notified of her lack of insurance, and relied upon the statement as written evidence of ongoing and active insurance cover.

She also stated that she had been phoned by the trustee during the year prior to the claim with an offer of additional income protection, so had no reason to believe that she was not covered.

Further details: The trustee claimed that it had not been advised that the member had left employment with the employer until after the claim was made. (In response, the member provided a statement from the employer confirming that they advise all funds of employees ceasing employment on a monthly basis.)

The trustee stated that, due to this delay, the trustee did not have the opportunity to update the member’s records regarding insurance cover until after the claim was made. The combined effect of the relevant policy and endorsement provisions meant that once the member’s account balance on the 71st day after the last day of employment was not $3,000 or more, her TPD cover ceased.

This also impacted on communication with the member, as the annual statements continued to list an insured value. However, all statements contained disclosures advising the member that the benefits were not guaranteed and that they were subject to the member meeting the conditions under the policy.

The insurer agreed that the member was not covered by the insurance policy at the date that she became totally and permanently disabled.

Decision: The Tribunal determined that the member was not covered by the policy at the date of disablement.

The Tribunal therefore affirmed the decisions of the trustee and the insurer to reject the claim on the basis that the member had no insurance cover.

However, the Tribunal found that it did not necessarily follow that the trustee did not have to compromise the claim.

The Tribunal considered the statements of the member and the trustee regarding the timing of the notification of ceasing employment, and preferred the evidence of the member. Further, the Tribunal found that the trustee’s administrator should have been alerted to the possible change by the cessation of the employer’s superannuation guarantee contributions, and sought confirmation from the employer as to the employment status of the member. The Tribunal found that the trustee bore the primary responsibility for keeping the member properly informed about her cover.

The Tribunal also found that the member satisfied the medical conditions of her claim.

The Tribunal set aside the decision of the trustee not to compromise the claim, and substituted the decision that the trustee compromise the member’s claim with interest.

 

Case study 3: What evidence is required for temporary incapacity?

Full determination available here: D18-19\093 [2018] SCTA 235 (13 December 2018)

Background: The member was admitted to surgery in 2015. She experienced an anaphylactic reaction to the anaesthetic and went into cardiac arrest. She spent one week in hospital, including time in intensive care.

One month after the surgery (as soon as she was physically able to), the member travelled overseas to recover while spending time with her family. She was unable to work, but at the time hoped to return to work in November 2015. She continued to experience symptoms as a result of the cardiac arrest and did not return to work, electing to take an early retirement in March 2016.

The member lodged a claim for a temporary incapacity (TI) benefit. The trustee declined the claim because it considered that the member was not temporarily incapacitated to the extent that she was unable to perform her duties after the end of the prescribed waiting period.

Complaint: The member brought a complaint to the Tribunal, seeking payment of the TI benefit for the period 4 September 2015 to 3 March 2016.

The member stated that she suffered from an injured airway, anxiety and insomnia. She listed impact on her rib cage, breathing issues, extreme exhaustion, inability to sleep or walk without pain and pain in her throat as her main physical concerns, and anxiety and insomnia caused by the experience, the memory of her daughters’ reactions and her ongoing awareness of the near-death experience as her main psychological concerns.

She had hoped to be well enough to return to work in November but was unable to. While overseas, she saw medical professionals who supported her diagnosis. Their medical notes were brief, but she submitted that the lack of medical evidence doesn’t necessarily lead to an absence of the symptoms; rather, that ‘the only real medicine that would help with recovering full ability to breathe normally enough to walk and speak was the passage of time…’.

Further details: The trustee stated that the medical evidence did not adequately demonstrate the member’s ongoing symptoms and how those symptoms impacted on her ability to perform her usual occupational duties.

Decision: The Tribunal determined that, while the evidence may not have taken the form the Trustee expected, it did state the member’s ongoing symptoms and showed that she was not fit for work until 20 December 2015. After this date, the Tribunal was not satisfied from the evidence that the member continued to be temporarily incapacitated solely due to her medical condition.

The Tribunal set aside the decisions of the trustee, and substituted the decision that the member’s claim be accepted for the period 20 October 2015 to 20 December 2015, and the payment to be made with interest.

 

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 - Q1 2019' in the subject line.

Superannuation Complaints Tribunal
Melbourne VIC 3000

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