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a superannuation fund member’s dispute
will be dealt with by the SCT. If FOS receives
such a complaint, it is referred to the SCT.)
2. The new covenant: Trustees are subject to
a new covenant under s 52(7)(d) of the SIS
Act: they are required to do everything that is
reasonable to pursue an insurance claim for
the benefit of a beneficiary, if the claim has
a reasonable prospect of success. Trustees
can seek to satisfy this new duty by lodging
complaints against insurers for free with FOS,
as opposed to the costly alternative of going
3. Financial advice for members:
The vast majority of super fund trustees use
another entity for giving financial advice to
super fund members (including intra fund
or scaled advice). Only a few super fund
trustees currently provide advice directly and
are therefore members of FOS.
Trustees can lodge a complaint with FOS
on behalf of a superannuation fund member
about such advice or the fund member can
lodge a claim with FOS directly, subject
to certain limitations discussed below.
FOS has significant experience in dealing
with disputes about financial advice and
4. Investment advice for the fund: FOS also
considers disputes about investment advice
given to trustees for the fund, but most
of these complaints are lodged by trustees
of SMSFs. It is unclear whether trustees of
other superannuation funds are aware of
this option, are generally satisfied with their
investment advice, or prefer to go to court.
5. Other service providers: Trustees
can lodge a complaint with FOS about
service providers, such as custodians and
administrators. The complaint can be on
behalf of the fund or on behalf of an
individual super fund member. Common
complaints are that an administrator made
an error in respect of excess contributions,
it miscalculated a benefit or that it provided
the super fund member with an incorrect
Superannuation fund members can
also complain to FOS directly about service
providers or they could complain to the
SCT about the trustee (who will generally
be responsible for its delegates’ conduct).
Unless the SCT joins the provider or the
Similarities and differences between FOS and the SCT
Both are established as independent forums to resolve
The SCT is a tribunal and FOS is an external dispute resolution scheme
approved by ASIC. In practical terms, this means that the SCT is governed by
legislation and FOS is governed by its Terms of Reference (although the content
of the two governing documents is very similar).
Both are funded by the industry (for the SCT through a levy
and for FOS by the financial services providers who are
members of FOS).
Both are required to deal with disputes in a cooperative,
efficient, timely and fair manner – for the SCT, this is
expressed as “fair, economical, informal and quick”.
The SCT primarily deals with disputes against decisions of trustees of regulated
superannuation funds (but not SMSFs) and FOS cannot.
FOS can deal with disputes lodged by trustees and the SCT cannot
(Superannuation (Resolution of Complaints) Act sections 14AA-15K).
Both can deal with disputes against insurers and others who provide
superannuation services, but there are differences, as discussed in this article.
Both must comply with the rules of natural justice but
are not bound by the rules of evidence.
They have similar procedures – with investigation, conciliation
and decision-making stages.
Both deal with the vast majority of disputes on the papers,
with the parties rarely appearing in person.
The basis of decision-making differs. The SCT determines whether a decision
under review is fair and reasonable in its outcome and FOS decides on the basis
of what is fair in all the circumstances.
The tests are similar but there is one main difference: the SCT is required to
affirm a decision that it considers was fair and reasonable in its outcome.
There is no equivalent provision for FOS.
Both can refuse to consider claims that are frivolous,
vexatious or lacking in substance.
Neither can deal with disputes that relate to management
of a fund (or scheme) as a whole.
Both are free of charge for applicants.
There is no financial limit on the amount of compensation the SCT can award
but there is for FOS. The limit is $280,000 for claims relating to investments
and $7,500 per month for claims about income protection insurance, in
addition to any award of interest and costs.
Both publish their decisions on their website (with parties’
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