Death benefit complaints to AFCA up 30%
Death benefit complaints to AFCA increased by about 30 per cent over the past year, according to its latest annual report.
In a recent members’ forum, AFCA senior manager, Rhys Lloyd, said death benefits are a significant issue for the authority and over the past 12 months a number of trends have emerged.
“Over the past year, AFCA received a total of 708 complaints about death benefits, and 488 of these were progressed into case management. This is an increase of 30 per cent from the previous year in which we received 374 death benefit distribution complaints,” Lloyd said.
“[This has] increased 14 per cent year-on-year, and death benefit delay complaints increased by 64 per cent year-on-year. In the 2023 financial year, death benefit distribution complaints accounted for 45 per cent and delay complaints accounted for 30 per cent of the death benefit complaints in comparison to the financial year.”
Lloyd said the increased number of complaints coming to AFCA has impacted the time required to allocate and ultimately resolve a death benefit complaint in case management.
“This is not ideal. As we know, parties to death benefit complaints can often be vulnerable or experience unexpected financial pressure after the loss of a fund member.”
“There has been an increase in the number of defective claims-staking notices trustees are issuing to propose beneficiaries. When a claim-staking notice is effective the trustee’s 28-day objection period is void, meaning, even if the objection to the final decision is made to AFCA, after 28 days, the complaint may still be eligible to be considered by AFCA.”
While it is not compulsory for trustees to use a claim-staking process if done correctly, he said, it provides some certainty and comfort to the trustee around the payment of a death benefit.
“Trustees should be reviewing their claims-staking letters to ensure these notices meet the requirements of section 1056 of the Corporations Act.”
“Another observation which has become more frequent is trustees referring beneficiaries to AFCA when a new or amended decision has been made following the review of an objection to a proposed decision.”
He said in these instances it is important to remember if the outcome of the trustee’s review of the death benefit objection is to alter the allocation of the death benefit, this becomes a new proposed decision, and the 28-day claim-staking period would apply again.
“Claim-staking letters need to be reviewed to ensure beneficiaries are being referred to the correct objection process.”
Additionally, Lloyd said AFCA had also seen an increase in the percentage of death benefit complaints resolving in conciliation.
“The feedback from the conciliation team indicates that cases which are most likely to resolve are those where the trustee’s representatives have the authority to work with parties to facilitate an agreed outcome, such as a slight change in the distribution which has been agreed to by all parties.”
Lloyd emphasised that AFCA has implemented several initiatives to expedite the resolution of death benefit complaints, including prioritising these cases and regularly reviewing unallocated complaints to ensure they are assigned to a caseworker as quickly as possible.
“We are now in the process of looking at our death benefit complaints process and how it can be updated to include early conciliation conferences ongoing.”