ASIC Sues Cbus Over Systemic Failures In Insurance Payouts

Superannuation Sector Under Scrutiny Amid Governance and Service Failures 

The superannuation sector is facing significant scrutiny due to a series of governance and service-related issues, particularly involving Cbus and broader industry practices. 

ASIC’s Legal Action Against Cbus: The Australian Securities and Investments Commission (ASIC) has initiated legal proceedings against Cbus, alleging systemic failures in handling death and disability claims. This legal action suggests that such issues may be widespread across the sector, not just isolated to Cbus. 

Governance Concerns: The Australian Prudential Regulation Authority (APRA) is investigating Cbus for governance issues, particularly focusing on directors linked to the Construction, Forestry, Maritime, Mining and Energy Union (CFMEU). This investigation highlights ongoing concerns about the governance practices within industry funds. 

Board Composition Criticism: The traditional 50-50 union-employer board model used by many industry funds is under fire for potential conflicts of interest and outdated governance practices. Efforts to reform board composition, such as a 2017 bill proposing one-third independent directors, were thwarted by lobbying from industry funds and unions. 

Industry Superannuation Fund Issues: Beyond Cbus, the broader industry superannuation sector has faced criticism for several reasons: 

• Conflicts of Interest: The close ties between unions and employer groups in the governance of industry super funds can lead to conflicts of interest, potentially compromising the best interests of members. 

• Lack of Transparency: Critics argue that industry super funds often lack transparency in their operations and decision-making processes, making it difficult for members to understand how their funds are managed. 

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