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SELECT COMMITTEE ON SUPERANNUATION AND FINANCIAL SERVICES - 13/12/2001 - Early access to superannuation benefits

CHAIR —Welcome, Ms Cullen. We invite you to talk briefly to your submission and then we will ask some questions. Would you like to make some comments on your submission?

Ms Cullen —Yes. The Superannuation Complaints Tribunal was asked to respond to four questions, and I would like to make a brief submission in relation to each of those. The first question related to the extent to which there is sufficient public awareness about the role of the tribunal, particularly in relation to its ability to review decisions made by trustees in relation to applications for financial hardship.

In the paper submitted by the tribunal, I have outlined the tribunal's range of initiatives to ensure that there is public awareness of the services of the tribunal. Essentially, the tribunal has a 1300 number and also has an interactive web site by which complainants can lodge a complaint through the Internet. We also have a range of publications available to members of the public which detail the services we provide and which also explain how to lodge a complaint.

There is no measure of the extent to which members of the public are truly aware of the Superannuation Complaints Tribunal. However, the conclusion may be drawn from the increasing numbers of written complaints that are being lodged with the tribunal that members of the public are able to access the tribunal. On 5 September, the tribunal's annual report for the year 2000-01 was submitted for presentation to parliament. I have copies of the annual report which I can tender if requested. The annual report shows that there were 8,733 telephone inquiries during that reporting year and 1,856 written complaints lodged during the reporting year. So telephone inquiries were down 17.6 per cent compared to the previous year, but written complaints were up 16.1 per cent compared to the previous year. Other than measuring these telephone inquiry numbers and written complaint numbers, we have no actual way of measuring the extent to which there is public awareness of the tribunal. It would be possible to conduct a survey of the public at large to gauge the level of public awareness, but we are not currently resourced to undertake such a survey. This is, however, the sort of initiative that we would encourage one of the superannuation bodies to undertake. If we could ascertain that sectors of the public were not aware of the tribunal's existence and the role that we provide, then we would be targeting those members of the public with public awareness initiatives designed to ensure that they received services if they needed those services.

Senator SHERRY —So that would be just about everyone. That is not a reflection on the tribunal, I might say.

Ms Cullen —Commonly it is found that there are certain sectors of the community that need more assistance. They might be people who have specific disadvantages. They might be people in remote communities or rural Australia. They might, perhaps, be people from non-English speaking backgrounds. So, for example, a survey of public awareness might find that we are not reaching people who do not speak English as their first language. But as no such survey has been carried out, we do not have the results to work with and therefore we are not currently designing specific initiatives to target specific groups.

A very important feature of access to the tribunal is the legislative requirement on trustees to inform members of superannuation funds about the tribunal. As you will be aware, the Superannuation Industry (Supervision) Act 1993 under section 101 does require trustees to inform members, when they join a fund and also if the member does express a complaint, about the tribunal. We find that this is a very effective mechanism for ensuring that people come to the tribunal.

Having said that, the extent to which there is compliance by trustees with section 101 of the act is another area which we believe should be subject to scrutiny. This is not an area that has, to the best of our knowledge, been the subject of a review. It relates to some statistics that you will find in the annual report, as recently published: 51.1 per cent of written complaints in the last reporting year were outside jurisdiction, and a large proportion of these complaints were outside jurisdiction due to non-compliance with section 101 of the SIS Act. That is, the complaint had not been dealt with by the trustee in their internal complaints handling procedure—therefore, the tribunal had referred the matter back to the trustee to be handled. That event would technically put that complaint outside the jurisdiction of the tribunal.

I think that the rather high percentage of outside jurisdiction complaints that we are receiving does indicate that there is a case to answer for trustees in relation to the extent to which there is compliance for section 101 of the SIS Act and the extent to which they have effective complaints resolution procedures to handle complaints regarding applications for early release and all the other complaints that they receive.

Senator SHERRY —That is an absurd position to be in, isn't it? I mean, the trustee does not comply, the complainant runs out of time, they come to you and then they have to go back to the trustee, and time has run out for the complaint to be heard.

Ms Cullen —Certainly the time limits under the legislation can operate to disadvantage complainants, and certainly where the tribunal has a discretion to allow certain time in such circumstances we would exercise that discretion.

CHAIR —In most cases you do not have the discretion.

Ms Cullen —That is correct. The other thing to remember is that there are many cases that may not even come to our attention because the complainant is not receiving the information about our existence. We have, as I said earlier, no measure of how many cases that might involve. Question 30 directed to the tribunal asks:

What proportion of the Tribunal's work deals with the complaints about early release of benefits?

In our paper, we note that APRA does deal with the early release of benefits on compassionate grounds. So if we do receive any complaints of that nature over the telephone or even in writing, the first step for us would be to refer such complaints directly to APRA, and we have got such a referral system in place.

The tribunal, as you know, does handle the decisions of trustees in relation to release of benefits due to severe financial hardship. However, perhaps surprisingly, these comprise only a very minor proportion of the tribunal's work. In fact, in the last reporting year it was only around two per cent of all written cases. In the event that a survey of members of the public is carried out, it perhaps could be interesting to know whether people are confused that there are a range of different persons or bodies that are available to respond to complaints of this nature. To what extent is there confusion by members of the public regarding the role of trustees, the role of APRA and the role of the tribunal? They are three different entities or bodies, all of whom may have some role in handling complaints of this nature.

Question 31 asked whether we believe there should be any changes to the tribunal's procedures. Currently our procedure for all cases that come before us is, firstly, to check whether we have jurisdiction to handle the matter. Assuming that we do, then the case goes through the investigation process, where case officers review the facts and attempt to settle the case at the earliest possible stage, through exchange of information with the parties. The second stage of the process involves conciliation, which is a teleconference conducted with all of the parties. Very few cases of this nature—that is, complaints relating to early release of funds—get through to the third stage of the process, which is the review stage.

As I said, we start with only two per cent of cases, so it is just a fraction. In fact, one such case was reported in the discussion paper that has been issued by the committee, and that is the only case that I am aware of that did reach review stage, certainly during my time. As I mentioned, the third stage of the process is review, whereupon usually a panel of three members of the tribunal sit down together with all of the facts before them and make a decision in relation to the case. We very rarely have oral hearings. Usually the determinations and decisions are made on the papers. We do not believe that there is any need to change our procedures. We already do expedite cases relating to applications for financial hardship, because of the nature of the claim and the circumstances of the complainant. We expedite them as quickly as possible through our system.

Finally, question 32 asks whether there should be any changes to APRA's decisions in relation to early release on compassionate grounds. Whilst it is not for us to suggest that APRA should institute any changes, we believe that it would be beneficial for there to be some communication between APRA and the tribunal regarding the types of cases that are coming before us, and perhaps a periodic exchange of information, in particular any published decisions and statistics, so that both bodies can have a better understanding of how the other body operates and the limitations or otherwise that impact on it.

CHAIR —You state that the tribunal has no jurisdiction to review a decision made by APRA, because that falls to the Commonwealth Ombudsman. Do you think that it is desirable that you should take on that responsibility?

Ms Cullen —The responsibilities of the tribunal, as you know, are set out in the act, and we are to implement those responsibilities. It is difficult for me to answer the question, because it is not for us to set policy, but insofar as I have been asked to answer that question, it seems to me that it would be practicable for there to be one body rather than two bodies to review all such complaints.

Senator SHERRY —It is commonsense.

CHAIR —You say that it would be beneficial to have periodic exchange of information between APRA, the Ombudsman and the tribunal in relation to early release. Why can't you effect that now? Is there a problem with privacy laws? What is stopping you doing it now?

Ms Cullen —There is nothing stopping us doing it now. It is a measure which should be part of our ordinary operations. In implementing such practices we would have to give due regard to all the relevant privacy considerations. Once privacy considerations were taken into account there would still be useful information that could be exchanged.

CHAIR —Why aren't you doing that already?

Ms Cullen —I am quite sure that it will be a measure that will be implemented very soon.

CHAIR —You felt that perhaps parliament should look at section 101. Can you share the full details of section 101? Do you have that with you?

Ms Cullen —I do not know whether I have that with me. I certainly could arrange for it to be delivered to you this morning.

CHAIR —I wanted to ask you about what aspects of it you think should be looked at.

Ms Cullen —It is a fairly general provision which requires trustees to have procedures in place to handle complaints. I recently noted that there is a difference between that provision and the new provisions that are coming in under the Financial Services Reform Act, whereupon bodies that provide financial services to retail customers are required to have internal complaints handling procedures which accord with the Australian standard. The requirements under SIS do not set a benchmark or any particular standards for the internal complaints procedures. The Australian standard on complaints handling, as you would probably know, is a lengthy document which contains a series of different benchmarks for an internal complaints system, yet under SIS there is no such requirement; it is just a general requirement that trustees have procedures.

CHAIR —It is a problem that the SIS Act, being a relatively old act, has not been brought up to date to meet the new requirements?

Ms Cullen —Yes, I believe that ASIC was recently looking into whether they should suggest amendments to that provision of SIS to reflect modern requirements. I believe ASIC's view is that, by and large, trustees are likely to meet the requirements under the relevant act. But again, as there is no empirical data, no research and no review of this, we are in the dark as to whether or not it is occurring, other than to say that in the course of its business the tribunal does occasionally have the opportunity to review trustees' practices in relation to internal complaint procedures and we do see many examples of trustees with excellent procedures in place and they seem to assist the complainants. For example, they often give reasons for their decisions and they provide information about time limits that will be applicable, et cetera.

Senator SHERRY —Yes, but do you see examples where there is nothing in the trust deed or very poor provisions?

Ms Cullen —We do.

CHAIR —A lot of lawyers suggest that perhaps trustees should not be giving reasons for their decisions because that only opens up a legal minefield. What is your view on that?

Senator SHERRY —A legal minefield which they would be keen to exploit.

Ms Cullen —The tribunal may have answered this before. I am sure there was a question posed by the committee. Certainly, my personal view on that is that, notwithstanding that there can be some legal issues to do with provision of reasons, in my experience complainants are, by and large, greatly assisted by the provision of reasons and quite often the provision of reasons can assist in the early resolution of the complaint.

Senator SHERRY —There is just one issue I want to raise. We have a series of provisions but in many cases they are not standard provisions for early access. It is up to the trustees to determine in some areas whether or not there should be an early release provision. Do you think that is a good thing? My view is that, if we are going to have early release provisions, they should be standard across the board, rather than leaving it to the discretion of trustees to have a particular provision in their trust deed. You get confusion: some people get their money and others do not, depending on the trust deed. Do you have a view on that? It might be a personal view.

Ms Cullen —I can understand that it might cause confusion to a consumer, especially if they have more than one superannuation fund and the trustees of each fund have different criteria. That could be confusing for the complainant. Having said that, historically it is a fact that trustees generally have a wide range of discretion across different sectors. There may be different reasons for there being different criteria in different sectors.

CHAIR —One of the witnesses from NSP Buck Pty Ltd suggested that perhaps you should not have this role because you are a little slow. They believe that other organisations such as APRA or Centrelink or somebody like that could provide a much speedier response. So, theoretically, while you might be the right department, the track record suggests—certainly to one witness—that this is perhaps not the way to go, because there is a fairly long time frame for the resolution of the complaint. How do you respond to that?

Ms Cullen —The tribunal's structural procedures are set out under the act, and we must comply with the act. As I said, it does have a three-stage process for the resolution of complaints: investigation, conciliation and review. It might be a good thing for there to be a review of the extent to which complaints of this nature need to go through that type of three-stage process. Under the complaints act, we are required to act efficiently and fairly. Working quickly is obviously one of our top priorities, but when we balance up those criteria I think the most important one for us is fairness. To achieve fairness, it is sometimes necessary to have the proper exchange of information and to go through a proper procedure for all of the facts to be ascertained. Of course, our procedure involves natural justice and we are subjected to review by the Federal Court, so it is not possible for us to take short cuts where matters of process are concerned.

CHAIR —But in the meantime there can be problems because of the urgency of the nature of the issue.

Ms Cullen —We do resolve the vast majority of the complaints that come before us in the first stage of the process, which involves the exchange of information between the parties and communications as facilitated by the tribunal. In difficult cases, perhaps the parties are entrenched or perhaps there are difficult cases of law. Sometimes it may be the involvement of other departments or the gathering of information from other agencies that is slowing the process such that the matter becomes entrenched and drawn out over a longer period of time. Perhaps it would be an interesting area of comparison to look at APRA's procedures for complaints of this nature as compared to ours and how the complaints fare as they travel through each of those processes.

CHAIR —But you should be doing—

Ms Cullen —We would be delighted to take on that responsibility if there was some further information we could provide to you.

Senator SHERRY —I had a couple a couple of cases where the tribunal was not to blame; the trustees were to blame because they were just incredibly slow in facilitating the process.

Ms Cullen —Yes.

Senator ALLISON —Can I go back to the question of public awareness? I am often surprised that government agencies and others do not seek to find out why it is that those who have called did so, in terms of why they called your agency and not someone else, and who referred them or how they were referred to the tribunal. Wouldn't it be a simple matter at the end of a telephone conversation in your call centre to say, `How did you know about us? Where did you find out? Was it a referral?'

Ms Cullen —Yes, it would be a simple matter and I think the results would be useful in terms of forward planning for the tribunal. We have recently instituted a new computer system. Before the institution of that system, we were somewhat hampered in our ability to collate that sort of material, but now that we have our new computer system it really is a measure that should be looked at by the tribunal.

Senator ALLISON —You would agree that that would give you further insights into what was successful and what was not in terms of public awareness.

Ms Cullen —It would certainly provide some information on what initiatives were being successful and which ones needed further promotion or publication, for example.

Senator SHERRY —Have you got details about the categories of complaints in your annual report?

Ms Cullen —Yes, we do.

Senator SHERRY —Where are they?

Ms Cullen —If you look at page 27 of the annual report, it details the nature of written complaints within jurisdiction. By and large, complaints regarding disability are the largest category of complaint, followed by complaints relating to death distributions. The complaints regarding early release of funds would come in under the heading `Other'.

Senator SHERRY —Does `Other' include administration? `Administration' is a huge category; what does it mean?

Ms Cullen —`Administration' regards administration of the fund, but obviously not management of the fund as a whole, which we have no jurisdiction over. Perhaps it might be an administrative matter which has given rise to a complaint, being a matter upon which the trustee has made a decision. Quite often it can relate to transfer of funds.

Senator SHERRY —How can we get further detail on the category of disclosure fees and charges?

Ms Cullen —The table indicates that there are two subcategories, `Agent Misrepresentation' and `Fees and Charges', complaints about fees and charges being at 3.3 per cent.

Senator SHERRY —I understand that, but how can we get detail about what these complaints were about?

Ms Cullen —The tribunal's determinations are published and are available on the web site. If it would assist the committee, I would be happy to provide a list of the case numbers for easy reference.

Senator SHERRY —I am just having a look at that issue at the moment.

Ms Cullen —It is a fairly small proportion of cases that come before the tribunal that relate to fees and charges.

Senator SHERRY —I am sorry; we are wandering a bit here. How do you have jurisdiction over surcharge issues? This is the tax surcharge, I assume?

Ms Cullen —Whatever jurisdiction we have is under the act. I am not sure which provision of the act it is under.

Senator SHERRY —It is just that it is a tax matter.

CHAIR —There are no further questions. Thank you very much for your attendance.

[10.38 a.m.]