QSuper Board v Australian Financial Complaints Authority Limited

April 2020
Disputes & Litigation

The QSuper case considers the circumstances in which an appeal from a determination of AFCA can be made.  However, it is perhaps more interesting for its commentary regarding the complaint considered by AFCA.

In very simple terms, QSuper introduced occupational ratings (amongst other insurance changes) with effect from 1 July 2016, that were disclosed to members in a significant event notice in May 2016.  

In January, the fund refused to give a refund of insurance premiums to a member (Mr Lam, a doctor) following the member’s complaint that the fund should have charged him premiums based on a professional occupation, from the commencement of the introduction of the occupational ratings.  

AFCA found that the refusal to do so was unfair and unreasonable.

It was accepted that the member had received the significant event notice and had access to revised incorporated information made available in 1 July 2016.  It was also accepted that an application by the member was necessary for the professional occupational rating to apply.  However, AFCA appears to have found that it was not until 6 January 2018, when the member accessed the fund’s website, that the member obtained sufficient information to be fully informed of the opportunity available to him to obtain a professional occupation rating.

The fund sought leave to appeal on various grounds, which was declined.

The Court indicated that:

  • the AFCA determination was not based on a finding by AFCA that QSuper had breached significant event reporting requirements
  • in any case, AFCA could have based its decision on the existence of a breach
  • it was not necessary for significant event report requirements to have been breached for AFCA to conclude that the refusal to refund premiums was unfair and unreasonable
  • there is a difference between satisfying your significant event reporting requirements, which involves notifying a member about the nature and effect of the insurance changes, and giving a member sufficient information to take advantage of the introduction of a professional occupational rating.  The judgement states ‘It was the lack of information about how to secure the benefit of the changes rather than what they were which was the foundation of the conclusion that QSuper’s refusal to refund Dr Lam’s premiums was unfair and unreasonable.’  

The Court did not review AFCA’s findings, including the basis for AFCA’s conclusion, that the member was not sufficiently aware of, or did not have access to, the manner in which he might take advantage of the new occupational rating until January 2018.  

We are nevertheless left with conclusions relating to factual circumstances (that are not unusual) that suggest funds need to do more than just meet their significant event reporting obligations.  This may not be surprising when considered against the backdrop of ASIC’s surveillance activity last year relating to the application of default occupational classifications by super funds.

To read the full judgment, click here.

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