Watchdog says super funds are failing their members

Super funds failing members on retirement savings, regulator says In short: Australia's corporate regulator warns that super funds are failing to deal with complaints properly. The Australian Securities and Investments Commission says the ombudsman is better at detecting industry-wide issues than the funds. What's next? It is threatening legal action against super funds that don't step up. Australia's corporate regulator says superannuation funds are failing their members in managing their retirement savings, warning that those who do not step up could be staring down future legal action. The Australian Securities and Investments Commission's (ASIC's) latest review looked at 45 superannuation trustees, covering $1.6 trillion in benefits for more than 12.8 million members. It found that superannuation members were more likely to get resolutions to their complaints if they went to the financial ombudsman rather than raise it directly with their super fund. It has prompted ASIC commissioner Simone Constant to hand down a blunt warning to the funds that "blaming customers is not a complaint strategy". ASIC has long been critical of how super funds handle member complaints over death benefits and disability insurance claims payouts and alleged fraud and misconduct. In March last year, it called on funds to overhaul the way they dealt with death benefit claims, noting excessive delays, poor customer service and ineffective claims handling were leaving Australians worse off at some of the most vulnerable times of their lives. In October last year, it criticised superannuation funds over the way they communicated with retirees. Payouts impact people's lives: commissioner Ms Constant said superannuation trustees managed $3.4 trillion in Australians' retirement savings. She said they were dealing with payouts that affect people's lives and the retirement savings they had worked hard to build. "Super funds must listen to what complaints are telling them," she said. "When trustees fail to learn from their complaints, small problems left unidentified, unattended or unresolved can snowball into widespread failures. "That expose[s] members to harm and erode[s] trust in the superannuation system." Super funds that don't step up could face legal action. "We're willing and able to bring these actions against funds for not meeting these legal responsibilities,"Ms Constant said. Funds not analysing their complaints data ASIC's inquiries across the industry found close to one quarter of trustees were not analysing complaints data to identify systemic issues on a regular basis. More than half of trustees reviewed (24 out of 45) identified fewer than five systemic issues from complaints over a two-year period. Of these, 14 trustees failed to identify a single issue. "We see low levels of systemic issue identification as a potential red flag, not evidence of better performance," Ms Constant said. "Alarmingly, the Australian Financial Complaints Authority [AFCA] appears better at picking up issues than industry. According to AFCA, superannuation complaints rose sharply in 2025–26, with the financial ombudsman receiving 8,755 complaints, up 42 per cent on the previous financial year. AFCA said complaints about super funds refusing to pay claims rose by 80 per cent. ASIC said during July 1, 2023 and June 30, 2026, more than 19,400 complaints were made to AFCA about superannuation concerning the 45 funds that were part of its whole-of-industry review. "When comparing the two years of data we collected, AFCA identified systemic issues from superannuation complaints it received at almost twice the rate all trustees identified from the complaints they received," Ms Constant said. Stop blaming members for faults ASIC also found several trustees blamed members when they made complaints. Several of them attributed more than 60 per cent of recorded complaint causes to members. "Blaming the customer is not a complaints strategy,"Ms Constant said. The review noted in one case, a tax-related system problem was raised through complaints for years before the trustee investigated whether other members were affected, with early estimates suggesting about 1,200 members could be impacted. Another case involved more than 250,000 members being unable to access documents online at different times. "Trustees need to look behind the complaint and ask whether poor communication, unclear processes, delays or system failures are driving member dissatisfaction," Ms Constant said. "If a member cannot access their benefit payment, cannot get a timely response, or doesn't receive the support they are entitled to or the services they are paying for, the consequences can be serious." But the industry said it was working hard to resolve issues. Financial Services Council chief executive Blake Briggs agreed superannuation trustees had a responsibility to deliver high-quality services to members. "In recent years, superannuation trustees have undertaken significant work to strengthen their complaints-handling frameworks, including improving processes for identifying and responding to systemic issues," he said. He said the government, almost two years ago, announced its intention to introduce mandatory service standards across the industry in response to unacceptable failures in how major funds had handled Australians' death benefit and group life claims. "We support ongoing industry efforts to promptly identify and address systemic issues, learn from complaints and improve processes to deliver better outcomes for members,"Mr Briggs said.