Industry funds investigate adviser's claims

by |
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