A Federal Court judgment has resulted in a substantial financial penalty against the trustee of one of Australia’s largest superannuation funds due to systematic delays in handling members’ insurance claims. United Super Pty Ltd, which operates the Construction and Building Unions Superannuation Fund (Cbus), must pay $23.5 million following its acknowledgment of processing failures that created delays for thousands of members and claimants.
The penalty amount exceeds the $18.5 million in annual revenue that United Super reported for 2024. Cbus has set aside funds to cover this obligation, and the fund has confirmed that member fees will not increase to offset the cost. In parallel with the court-ordered penalty, Cbus has committed approximately $32 million to compensate an estimated 7,402 affected individuals through its remediation program.
The court’s examination of claims data revealed the magnitude of the processing bottleneck. From late March through early May 2023, roughly half of all outstanding death claims – a range of 438 to 479 cases – remained unresolved for longer than one year. Similarly, total permanent disability (TPD) claims demonstrated comparable delays, with 38% to 43% of cases exceeding the 365-day mark, representing between 391 and 409 individual claims.
A prominent case illustrating member hardship involved a widow who brought her situation to public attention through ABC radio in June 2023. She had waited 15 months for her deceased husband’s death benefit to be processed. Her public disclosure about communication breakdowns and prolonged telephone hold times prompted Cbus to investigate, ultimately leading to the notification sent to the Australian Securities & Investments Commission (ASIC).
The court judgment emphasised that “delays in the payment of benefits under insurance products can have serious and unacceptable consequences for affected members and claimants,” according to Justice O’Callaghan’s written decision. The financial settlement provides redress to bereaved families and individuals facing permanent disability determinations during periods of significant personal difficulty.
From October 2022 through November 2024, Cbus delegated its claims administration function to Australian Administration Service Pty Limited (AAS), a subsidiary operating under MUFG Pension & Market Services Holdings Limited. This outsourcing arrangement became central to identifying the governance deficiencies that the court addressed.
The judgment found that United Super’s senior management and board committees possessed knowledge of service level shortfalls from November 2022 onward. Justice O’Callaghan noted that a fund of Cbus’s size and standing – positioned ninth nationally with assets exceeding $95 billion as of mid-2024 – bore responsibility to maintain systems preventing and detecting failures. “It ought to have had more robust processes and systems in place to ensure compliance with key legislative obligations, and to prevent, promptly identify, and correct repeated individual and collective human errors resulting in failures to process claims within a reasonable timeframe,” the judge said.
The court identified four specific breaches of the Corporations Act:
Beyond the processing delays themselves, the judgment addressed timing failures in regulatory notification. ASIC required notification by March 3, 2023, and again by July 20, 2023. However, Cbus submitted its report on August 5, 2023 – following the ABC Melbourne Radio discussion. The court found this constituted separate Corporations Act contraventions.
ASIC deputy chair Sarah Court commented on the enforcement action’s significance. “Thousands of Australians suffered real and avoidable harm because of long delays and systemic failures in the way Cbus handled important and sensitive insurance claims. When people were grieving the loss of a loved one or grappling with a life-altering injury, Cbus should have ensured timely and accurate decisions were made on their insurance claims,” she said.
Court further noted that “not only was Cbus aware of increased insurance claim volumes, but it was also put on notice by its own customers who were complaining about the long delays they were enduring.” She indicated that “ASIC has increased its scrutiny of claims handling and member services failures, which are both ASIC enforcement priorities. The sector should be on notice that ASIC is sharpening its focus.”
Beyond the primary penalty, Cbus must contribute $500,000 toward ASIC’s litigation expenses and implement a compliance program incorporating independent expert assessments of its current systems and processes.
In response to the Federal Court judgment, Cbus said it has negotiated a settlement with MUFG Retirement Solutions addressing the administration disputes. This settlement included an apology to members and financial compensation to the fund. Over the preceding year, both organisations implemented process improvements to expedite claims resolution.
The fund has expanded its claims team capacity by 100% and created dedicated units specialising in claims processing. Cbus announced additional structural changes targeting four to six week reductions in average death claim processing timelines, alongside a simplified claims payment procedure commenced Dec. 1, 2025.
Data from the Australian Financial Complaints Authority (AFCA) demonstrates the significance of these issues across the sector. AFCA complaint volumes regarding claims handling delays within superannuation funds doubled during the 2022-2023 period, while complaints specifically concerning death benefit processing tripled during the same timeframe.
