Superfunds caught incorrectly overcharging members with smoker rates on their premiums

Andrew Mo Published: 10 September 2020

Have you given up smoking in recent years (longer than 12 months)?
Or maybe your superannuation fund has wrongly classified you as smoker. Now is a good time to check and make sure you’re getting fair value on your premiums.

A recent investigation lead by ASIC has found that some of Australia’s biggest superannuation fund trustees have been wrongly classifying their members as smokers. They have also found that in many of these cases trustees have taken very little steps to remediate members for their additional premium payments.

This ASIC investigation has found that funds such as AMP, Colonial First State, Equity Trustees, IOOF (including OnePath), Intrust, Netwealth and Suncorp have all taken part in these offending practices. Although, since these findings, all seven of these funds have removed the default smoker status for new members, only four of these superannuation businesses have refunded or even promised to refund members who have incorrectly paid higher premiums. According to ASIC, from the remaining three providers (IOOF, AMP and Suncorp), a vast majority of affected cases belong to members of IOOF. This is made up of approximately 146,000 customers from the OnePath Masterfund which was officially transferred across from ANZ earlier this year.

“Those trustees that have committed to remediation are heeding the lessons of the Financial Services Royal Commission – that trustees should seek to achieve outcomes for members in line with community standards and expectations,”

ASIC has also since advised members to contact their fund if they believe that have been wrongly classified as ‘smokers’ and to reach out to the Australian Financial Complaints Authority for dispute resolution if necessary. ASIC Commissioner Danielle Press has also released a statement to grow the awareness of this issue:

“Generally, insurance premiums for smokers are substantially higher than for non-smokers, given the low prevalence of smoking among Australian adults, classifying members as ‘smokers’ for insurance offered through superannuation unless the member takes active steps to confirm non-smoking status is contrary to community expectations.”

This comes off the back of thousands of Australians taking part in new class actions aimed at insurance companies who are accused of recommending and selling more expensive in-house policies over cheaper alternatives. Proceedings against AMP are one of three that are already in motion with claims that the company has put in systems which overcharge unsuspecting customers. Similar class actions against Westpac group’s BT and Commonwealth bank are also expected to be underway. The combined actions are expected to be one of the largest moves against financial institutions since the Royal Commission.

Have you have been affected by increases to your Life Insurance premiums? Or perhaps you would like to see if something better suited to your insurance requirements is available. Feel free to use our comparison engine here and compare quotes from up to 8 Life Insurance brands. Alternatively, if you would like to speak with a Life Insurance specialist, give our friendly team a call on 1300 135 205.

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