Merging funds on notice to communicate with members

Superannuation funds have been placed on notice that they, their staff and their contractors need to adequately respond to member enquiries, particularly with respect to the black-out periods stemming from mergers and successor fund transfers.

This follows a determination (D17-18\166) from the Superannuation Complaints Tribunal (SCT) setting aside superannuation fund’s decision not to compensate a member who claimed not to have been adequately informed about a black-out period when wanting to make an investment switch.

The SCT determination made clear that superannuation funds were obliged to fully inform members, particularly when those members made specific queries.

It found that despite the fact the superannuation fund had provided the member with a significant event notice as required by law, it needed to go further when actually contacted by the member.

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It stated: “… the Tribunal further finds that when a member of a superannuation fund contacts a fund with express queries regarding the Fund, those questions must be adequately addressed by the representatives of the Trustee.

“The Tribunal finds that the Complainant did contact Fund representatives on a number of occasions seeking information regarding the blackout period. It was clear that the Complainant and her husband were not aware of the blackout period or the terms of the blackout. It was incumbent upon the Fund representatives to adequately respond to the Complainant's express queries regarding the blackout period,” the SCT determination said.

“The Tribunal acknowledges that the Complainant did not expressly state that she wished to make an investment switch, as submitted by the Trustee; however the fact that the Complainant was seeking the ability to actively monitor her investment returns raised the possibility that she may wish to make an investment switch as a result.”

“At no time during the Complainant's contact with the Fund representatives was the Complainant or her husband informed that she had the ability to request an investment switch that would be processed after the end of the blackout period using the effective date of receipt.,” it said. “The Tribunal finds that this was a crucial aspect of the disclosure in the Important Information notice and should have formed part of the disclosure made in response to express queries regarding the blackout period.”

“The Tribunal accepts the submission from the Complainant that the responses from each Fund representative gave her the impression that there was nothing she could do to change her investment option during the blackout period.”

As a result of the SCT determination, the fund found its original handling of the member’s complaint set aside on the basis that the member had lost her opportunity to make an investment switch following express queries to Fund representatives regarding the blackout period”.

The SCT ruled that the member should be compensated on the basis of the difference between the return the Complainant would have received on her account balance from 27 November, 2015 to 19 January, 2016 had her account balance been invested in the cash investment option rather than the Fund's MySuper (Balanced) investment option.