Industry funds investigate adviser's claims

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An industry super fund has indicated it is investigating an adviser’s claims of bad practice for life insurance pay-outs.
 
Adviser Melinda Houghton spoke to Wealth Professional on Friday about three of her clients who she believed had been treated badly by the industry super funds they signed up to, including for life insurance.
 
The article prompted at least one of the super funds involved to investigate.
 
A spokesperson from LUCRF Super said they were investigating the allegations directly and could not comment immediately, but would respond once enquiries were finished.
 
Houghton said a client with LUCRF Super increased his life cover from the default to about $440,000. He was subsequently diagnosed with liver cancer and passed away within five months.

“The superfund held up the claim for 12 months saying because he increased his cover he knew he was going to die. This guy was healthy, but liver cancer is quick. Five months is actually a long time to survive liver cancer,” Houghton said.

According to Houghton, it was only when her firm Houghton Strategic Solutions became involved and rang the super fund weekly that the man’s widow and two kids got a pay-out.


The other two funds who Houghton’s clients had problems getting life insurance pay-outs from, have also been asked to respond.

Australian Meat Industry Superannuation Trust CEO James Thomas said he had no comment to make on Houghton's allegation the super fund refused to follow the wishes of a dead woman to grant half her super and life insurance to her second husband and half to her daughter. 
 
The 22-year-old daughter, who approached the adviser for help, is a single mother and badly needed the money which was all given to her stepfather, Houghton said.

In another case, ongoing with Care Super, Houghton said a client was asked to provide company information when she is unable to do so as a sole trader. The woman is terminally ill with cancer and cannot get a pay-out for her medical treatment.
 
A spokesman for Industry Super Australia, on behalf of the three funds, said with over five million members, industry super funds focus on providing whatever support and advice they can to help members and their families access anything they are legally entitled to in situations like these.
 
“Decisions on insurance pay-outs or early payment of benefits need to comply with the federal laws as they stand, which bind all regulated super funds in Australia.”

Overwhelmingly Australians want impartial financial advice that is in their best interests, he said.
 
“We’re concerned about proposed changes to the laws around financial advice, which will allow a return to the bad old days when the professionalism of financial planners is brought into question due to perceived or actual conflicts of interest and an absence of a rigorous obligation to act in a client's best interests.”

MORE:

Adviser hits back at ISA 

Motivations for choosing life insurance revealed
 
Not speculating on hypothetical court challenges
  • Wally on 18/02/2014 2:12:27 PM

    I love that comment at the end. Like a wind up puppet we get the old 'only to benefit members' garbage. How about a proper response to the client issues rather than a repeat of the ISN slogan yet again. A tip to that spokesman, it wasn't the right time to go for that plug mate. Fix the insurance payouts before chanting your mantra again. You haven't done much for your client's best interests here have you?

  • Mark Washfold on 18/02/2014 2:22:57 PM

    I have numerous examples of Industry Funds making it nearly impossible to access Insurance payouts. We regularly get involved because people we meet have virtually given up on getting a payment. Industry funds will do almost anything to reduce the amount of payouts.
    Their calculations are very discriminatory, their timeframes are disgraceful and their concern for the bereaved is non existant. Would not go anywhere near them.

  • Melinda Houghton on 18/02/2014 2:44:22 PM

    Only one fund has actually contacted me so far, with no resolution as yet.
    I welcome investigation and I am happy to provide evidence.

  • Craig Yates on 18/02/2014 3:04:48 PM

    So the "Spokesman" for Industry Super Australia is not so confident in the robust accuracy of their comment that they will provide their name and position within that organisation ??
    It could have been the junior office assistant on a lunch break or the work experience student!
    How can any particular industry super fund offer impartial financial advice in the best interest of the consumer when they are only representing and giving general advice for that one fund?
    These comments have no real meaning and are just regurgitated marketing spiel from the same common script.

    Perhaps that comment was made by

  • Best Interest on 18/02/2014 3:26:56 PM

    Why did Industry spokesman feel it was appropriate to even state those last 2 paragraphs in a topic that had nothing to do with FOFA, and why did WP feel it appropriate to publish such unrelated propaganda to the actual article?!?

    Ironically, the last paragraph mentioned professionalism, which clearly wasn't on display for him to bring up FOFA changes and for WP to publish such unrelated spiels.

  • Lisa on 18/02/2014 3:27:12 PM

    Totally agree - low fees means no service as far as i can see - hold onto money too long, lose paperwork, allow things to sit in inboxes forever, won't send information promptly, create delays such as refusing to send info to third parties with client authority, and no surprises the insurers are equally as reticent to help their members. Independent insurance claim - cheque in less than 2 weeks for Prostate Cancer claim. Magic.

  • Investor on 18/02/2014 3:36:23 PM

    I have an ISA Fund not paying out for TPD for a blind client, when it is one of the definitions in their PDS. They have tried every trick in the book. They send every bit of correspondence to the client even though a solicitor is running the claim, they wouldn’t correspond with the solicitor because the client had an adviser Authority with the fund but not the insurer, they ask for a new form, even though they sent the form. This is nearly one year one, for a specific injury claim. The ISA needs dealing with. I can’t afford to replace my TV every time an ISA ad comes on.

  • alleycat on 18/02/2014 4:06:35 PM

    Self serving, self interest should be the only mantra that ISA funds should chant,.... because that's the only creed they really live by.

  • Rob on 18/02/2014 4:36:59 PM

    Having had experience with the lengthy process of claiming with Industry Fund insurance in the past, there is little to crow about there. Lower Fees? Better Outcomes? Look again, friend.

  • Rob on 18/02/2014 4:39:00 PM

    Having personally experienced the claims process and constant delays with Industry fund insurance, there is little compelling reason to retain this insurance cover. It is a shame Industry funds do not put forward their claims statistics as proudly as their mantra of Lower Fees. Better Outcomes is more my desire for clients.

  • Suspicious on 18/02/2014 4:54:21 PM

    Wealth Professional gives an inordinate amount of oxygen to the industry funds and .
    the concluding remarks chosen by the journalist are curiously supportive of the industry fund propaganda and add nothing to the concern raised around the insurance experience of members. Whose agenda are Wealth Professional pushing ?

  • David from Perth on 18/02/2014 4:55:37 PM

    To the ISA spokesperson stop being so anal, start being humane instaed of the perseption that the industry has of you.

  • BD on 18/02/2014 5:30:49 PM

    We have seen several instances of Industry Fund fun and games in relation to insurance. One example was the 55 year old client with a member statement showing a $17k balance and an $87 k death benefit - ie $70k life insurance. The client had brought the fund PDS with him and it showed that for a person of his age, the default insurance cover was $5k - down from $70k at age 23. Now the client either had 14 units of insurance cover (the member statement also said that the premium for this insurance was $0, because the insurance cost is a "fee" (not disclosed on the member statement), not a premium) or they had $5k, and the member statement was false and misleading. We encouraged the client to call the fund to confirm their situation: result? They had $5k cover and their member statement was false.

    A worse example was the client with terminal cancer. We told him to apply for a terminal illness payment. A year later his widow came to see us, and we asked how it went. Her husband had died 6 months ago (sans payout) and she had informed the fund of his death. The fund then calculated that as he had had a birthday, he was a year older, and as cover decreased with age, eventually paid a death benefit, reduced for his increased age at time of death.

  • Innocent Observer on 19/02/2014 7:51:33 AM

    @Wally and @Mark are right.

    ISA does some things extremely well, and some things absolutely terribly.

    To ISA's credit, their insurance product offerings are a lot better than they used to be (going back 10, or even 5 years). However they are still full of holes, and come claim time it's the usual problem of a client trying to manage the claims process themselves. Clients aren't stupid, but when they're up against an insurance contract that's so full of grey areas it's not surprising that many just accept the insurer's decision not to pay.

    As for the comments from ISA's spokesperson.... Are you serious? I'm pretty sure that the average punter is more interested in having their claim paid than whether their adviser is getting a few dollars of trail commission.

    Grow up ISA.

  • Innocent Observer on 19/02/2014 7:53:55 AM

    Keep up the fight @Melinda!

  • Ke Ferguson on 19/02/2014 10:35:39 AM

    I agree with nearly all of the comments.
    I have one claim (and quite a few others)the Industry Fund was too busy to complete and I still have the letter sent to the client and after we submitted a complaint they advised they were within the guide lines they had set them selves and they would get to the claim in the next few months?

    The widow had to sell an investment property (at a loss) because of the time taken to finally get the pay out because she was unable to work and needed the money to live.
    We had assisted her with the claim forms and also the complaint (at nil fees Mr Shorten)

    If they spent the money they do on advertising and sponsoring sporting teams (I wonder who pays for that?) on getting claims right perhaps we wouldn't have these questions raised?

  • Innocent Observer on 19/02/2014 12:34:42 PM

    As the dulcet tones of John Wood assure us:

    "Industry Funds are run ONLY to benefit Members*, with no commissions paid to financial advisers..."

    *unless you are sick, injured, die, need advice, or are in any other way a square peg that doesn't fit into ISA's pre-fabricated round hole.....

WP forum is the place for positive industry interaction and welcomes your professional and informed opinion.

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