Adviser Melinda Houghton, of Houghton Strategic Solutions, has spoken out at the unfair treatment clients – and advisers – get at the hands of the industry super network.
Houghton is upset by three cases she recently took on where the clients were mistreated by the industry superfund they had signed up to.
In one ongoing case, Houghton had a woman come to her as a new client in November. The woman – terminally ill with cancer – cannot get a pay-out for her medical treatment from her provider Care Super.
“They have come back to her to say they are aware she is a sole trader and they are awaiting company information, like company tax returns, from her before they assess the claim,” said Houghton.
“I explained to them that sole traders are not companies. Companies are separate types of business entities, but they didn’t understand and said she still has to come back to them with the information. So they are asking someone who is extremely ill and about to die to provide them with information she doesn’t have and is totally unrelated to the claim.”
Houghton now has to put herself at risk by acting on the woman’s behalf by forming her word for her in writing, as the woman is too sick to do so.
“At the moment we don’t know what will happen. She’s getting no money towards treatment. Her condition is generally six to 10 months of life after diagnosis.”
The next incident is “absolutely appalling”, said Houghton.
The mother of Houghton’s young client – who again became a client after she found the fund would not pay out – had made a non-binding nomination of her super and life insurance of 50% to her second husband and 50% to her daughter.
The stepfather completed forms when mother passed away and nominated the daughter as a non-dependant, and the superfund – Australian Meat Industry Superannuation Trust – declined the mother’s request and gave 100% of the money to the stepfather, without giving any reason.
“So we established the daughter was financially depended on her mother and put this in writing to the superfund. The daughter is a single mother in her early twenties and needs the money, while the husband is financially secure.”
Houghton still hopes for a positive outcome on this case.
“Clients don’t understand the risks and there is no reason to propel the fund to tell them of the risks. Advisers have a duty to their clients to tell them about the risks, but super funds don’t. What happened in this case is the trustee has decided to go against the clients wishes.
“It’s not illegal it’s just immoral. There’s no justification for that. And the superannuation complaints tribunal process was too much for a grieving young 22-year-old.”
In the third case Houghton is unhappy about, 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.
Meanwhile, his widow and two kids were desperately awaiting the pay-out.
“The superfund was delaying, delaying, delaying just because they felt like it…The stress on that family was unbearable.”
Houghton’s firm got involved, ringing the super fund weekly until they paid up. “But it should have taken less than three months,” she said.
The problem with all these cases – and many others – is the consumer does not understand the risks involved in an industry super fund, Houghton said.
“[ISA] portrays themselves as high quality and offering financial advice and quality products , but they don’t offer the advice and they don’t tell clients about the risk.
“If the client is aware of the risks involved and they choose it anyway because it’s cheaper, then that’s fine – but that’s not the case. The [ISA] is basically putting down the financial advice profession which is trying to help these clients by constantly telling the public that we are doing a bad job. And that’s what needs to change.”
Houghton thinks most financial advisers are doing a “brilliant job” at helping people resurrect their finances.
“But we’re totally sick of being put down by the industry super network. The blatant television adverting – ‘compare the pair’ – it’s just rubbish, it makes no sense, and it’s very frustrating that uneducated consumers, generally the ones who won’t seek advice, believe the advertisements and take on major risk,” she said.
“It’s a bit like working for someone and getting smacked over the head at the same time. We’re the pariahs. The only reason we still do it even though we get abuse for it is because we know we are making a difference in people’s lives.”