Are you due some cash? Thousands of Australians will be handed a boost to their super after they were wrongly classed as smokers
- Superannuation funds were unfairly charging customers extra for life insurance
- ASIC found new customers were being wrongly listed as smokers by default
- Practice was happening despite the number of Australian smokers declining
- Commissioner Danielle Press said it was contrary to community expectations
Thousands of Australians will soon pocket extra cash after being wrongly classed as smokers by superannuation funds.
Nine superannuation funds were found to be charging new customers extra premiums on life insurance by listing them as smokers by default, despite a low number of Australians smoking.
More than $3.6 million will now be paid out after the Australian Securities and Investments Commission found the businesses were relying on customers to take active steps to opt out of the categorisation.
The super funds involved are AMP, Colonial First State, Equity Trustees, IOOF (including OnePath), Intrust, Netwealth, and Suncorp.
Thousands of Australians will soon pocket extra cash after being wrongly classed as smokers by superannuation funds (pictured: A woman smoking in Brisbane)
According to government figures smoking has dropped in popularity over the past decade with just 14 per cent of Australians identifying as daily smokers in 2018.
ASIC Commissioner Danielle Press said the opt-out practice was contrary to community expectations.
'Insurance in super is complex. Many Australians may not realise that default classifications can impact the price of their cover and therefore, reduce their retirement benefits,' she said.
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'In light of the low smoking rate, merely providing disclosure and putting the onus on members to act is not enough to support good member outcomes.'
She said all businesses they spoke to have ended practice and many had decided to refund affected members, in part or in full, for the higher insurance costs.
More than 5,000 members will have receive more than $3.6 million in compensation once the remediation is complete.
ASIC Commissioner Danielle Press said more than 5,000 members will have receive more than $3.6 million in compensation once the remediation is complete
AMP Superannuation, one of the largest super funds, has refused to provide refunds to 3,506 members who were charged the higher 'smoker rates'.
A spokesman told the Courier Mail the company has 'always communicated to members their option to change the terms of their insurance arrangements into non-smoker status'.
'We found no breaches or need to remediate.'
Ms Press has urged super funds to ensure their members are not disadvantaged due to disengagement or inertia.
'For many Australians, insurance in superannuation offers quality coverage at a competitive price. Choosing appropriate default settings for insurance coverage is an important part of a trustee’s responsibilities in relation to group insurance.
'I strongly encourage trustees to take into account the composition and needs of their membership and check whether their default settings for insurance coverage are reasonable,' she said.
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