The Superannuation Complaints Tribunal (SCT) has sent superannuation funds a message that they need to clearly explain to members the reasons behind insurance premium rises and their impacts.
A recent SCT determination, details of which have been outlined by barrister, Noel Davis in the Australian Superannuation Law Bulleting, saw a superannuation fund order to repay a member the increased premiums deducted from her account, plus interest.
The tribunal said that an issue as important to a member as a substantial increase in her insurance and a very significant increase in her premiums should have been clearly spelled out.
It said such a move should have been conveyed in a letter enclosing the disclosure document or the snapshot, without the member having to refer to lengthy documents to know that there was to be a significant cost increase.
The tribunal said that for that information to provide her with details of her new insurance arrangements, she would have had to carry out a calculation from the table provided by the superannuation fund.
A snapshot of her insurance arrangements sent to the complainant with the disclosure document, in the view of the tribunal, did not tell her what her increased sum insured would be and what her increased premium would be. Rather, it told her what her insured amount was prior to the increase.
The tribunal found that the superannuation fund's letter to the member did not give her clear warning of the very significantly increased premiums that would be deducted from her account.
Because of the inadequate disclosure, the tribunal decided that the increased premiums that had been deducted should be refunded to her account, plus interest.