Superannuation trustees operate in an increasingly complex legal and regulatory landscape, where failure to meet expected standards of service or oversight can lead to significant consequences including regulatory intervention, reputational damage, and losses for members. Three key areas where heightened vigilance is required are service standards (particularly in claims handling), operational and outsourcing risks, and the oversight of investment platforms.
1. Service Standards and Claims Handling Obligations
Trustees are expected to manage insurance claims in a manner that is efficient, honest and fair. This includes ensuring that claims are:
- Processed promptly, transparently and fairly;
- Managed by well-trained staff, supported by clear internal processes;
- Subject to regular monitoring and escalation, especially in complex or delayed cases.
Regulators have made it clear that poor performance in claims handling such as delays, miscommunication, or lack of follow-through can result in regulatory scrutiny and enforcement action. Trustees must therefore invest in systems, staff capability, and controls that deliver consistent and high-quality claims experiences for members. Regular oversight of claims and insurance partners is essential to ensure compliance and delivering fair outcomes to members.
Industry publications that can assist funds in identifying relevant service standards and regulatory requirements for insurance claims handling include:
- ASIC Report 806 – Taking Ownership of Death Benefits
- APRA Prudential Standard SPS 250 – Insurance in Superannuation
- APRA Prudential Standard SPS 515 – Strategic Planning and Member Outcomes
- ASIC Regulatory Guide 271 – Internal Dispute Resolution
- The Life Insurance Code of Practice
- Financial Services Council Standard 28 – Claims Handling for Superannuation Funds
- ASFA Service Standard – Claims Handling in Superannuation – Insurance and health related claims
2. Prudential Expectations on Operational Risk and Outsourcing (APRA CPS 230 and CPG 230)
APRA’s newly enforced (1 July 2025) CPS 230 Operational Risk Management provides updated requirements for managing operational and outsourcing risks. CPG 230 (June 2024) provides relevant guidance for meeting those requirements. Trustees are expected to:
- Maintain oversight and accountability for all outsourced services, including administrators and claims managers;
- Conduct regular reviews of service provider performance against agreed standards;
- Ensure robust risk management frameworks are in place to identify, assess and mitigate legal and compliance risks.
Inadequate oversight can result in a breach of trustee duties, especially where systemic service failures lead to poor member outcomes.
3. Platform Oversight and Emerging Legal Risks
Recent cases such as the First Guardian and Shield Master Fund collapse have highlighted the legal and fiduciary risks associated with inadequate investment platform governance. Trustees must:
- Undertake due diligence and ongoing monitoring of investment platforms;
- Be continuously alert to fraud risk, conflicts of interest, and opaque ownership structures, and be ready to act quickly;
- Take proactive steps to safeguard member assets, particularly when platforms are operated by related parties or third-party custodians with limited transparency.
In the aftermath of such failures, regulators are placing greater scrutiny on trustee governance and the robustness of control frameworks especially where losses to members are involved.
Conclusion
Superannuation trustees face rising expectations to demonstrate diligence, accountability, and transparency in every aspect of their operations. Whether in claims handling, outsourcing arrangements, or platform oversight, the common thread is the need for robust governance and proactive risk management. Those who fail to meet these standards not only risk regulatory intervention but also the erosion of member trust. Those consequences can be difficult to recover from. Ultimately, trustees who invest in strong systems, clear oversight, and a culture of accountability will be best placed to navigate the evolving legal and regulatory landscape.
Anisha Jain and Nathan Kazakevich
Anisha and Nathan have worked on a large number of expert evidence, life insurance and superannuation projects at McGing Advisory & Actuarial.