Funds burnt in smoker mix-up
THOUSANDS of ripped-off Australians will pocket compensation after superannuation funds wrongly classified them as smokers and charged higher fees for life insurance.
More than 5000 super members will share $3.6 million in compensation after action by the Australian Securities and Investments Commission.
ASIC on Friday exposed nine super funds which had automatically classified life insurance clients as smokers, even though only 14 per cent of Australians smoke.
But one of the biggest funds, AMP Superannuation, has refused to provide refunds to 3506 members charged higher “smoker rates’’ for life insurance, ASIC revealed.
“AMP has always communicated to members their option to change the terms of their insurance arrangements into non-smoker status,’’ a spokesman said. “We found no breaches or need to remediate. We are working hard to help members understand their insurance arrangements and the options available to them.’’
ASIC said Suncorp was still deciding whether to compensate 1573 members in its Suncorp Master Trust.
It said IOOF would not provide refunds to 146,000 members of its OnePath MasterFund or 350 members of its IOOF Portfolio Services Superannuation Fund.
CFS would provide partial refunds totalling $2.97 million to 3894 members of its Colonial FirstChoice Superannuation Trust.
Netwealth had agreed to pay 1046 members of its Superannuation Master Fund a total of $598,365.
Equity Trustees would pay 65 members of AMG Super a total of $34,507 while 36 members of Intrust Super would pocket a total of $29,316.
ASIC Commissioner Danielle Press said that smokers generally paid “substantially higher” premiums than nonsmokers, for life insurance.
“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,’’ she said.
Ms Press urged members to contact their super fund if they think they have been inappropriately classified as “smokers’’, and lodge any complaints with the Australian Financial Complaints Authority.
News Corp has sought comment from IOOF.