One of the superannuation industry’s most senior figures has hit out at the legal profession for slugging super fund members who make successful disability claims through their super funds.
Pauline Vamos, the chief executive of the Association of Superannuation Funds of Australia, believes lawyers have turned to milking fees from the superannuation system in recent years after state governments tightened eligibility rules for workers’ compensation schemes.
Ms Vamos said that ASFA was writing to legal societies across Australia to explain the superannuation industry’s concerns about lawyers targeting the liberal disability definitions of insurance policies offered by super funds.
“Lawyers are taking up to 35 per cent of disability payments made to super fund members,” she told The New Daily.
“Super funds have told me that lawyers are charging $3500 just to fill out a claim form.”
ASFA is the peak body for superannuation providers in Australia and is agitating for law societies to review the practices of their members in relation to insurance claims made through super funds.
Ms Vamos said that historically about 95 per cent of all disability claims were paid out by super funds and that it was hard to see how lawyers were adding value to the claims process.
In letters sent to the Law Society of NSW, Ms Vamos states that fund members “are incurring unnecessary legal costs when making claims, which only reduces their final benefit”.
ASFA’s biggest concern is that lawyers are encouraging clients who are denied claims to issue legal proceedings through the courts, rather than follow their super fund’s internal dispute resolution schemes.
“The feedback we are getting from super funds is that lawyers are superfluous in the claims process,” she said.
“We’ve told the law societies that we’re greatly concerned with the increased involvement of lawyers early on in the claims process.
“We’re also concerned about the failure of lawyers to the tell the truth to clients that most disability claims are paid.”
Ms Vamos said the number of lawyers involved in disability claims had trebled in the last few years, with the recent tightening of workers’ compensation in NSW a major driver of the profession’s interest in insurance policies marketed by super funds.
NSW lawyers defend their new patch
The New Daily sought comment from the CEO of the Law Society of NSW, Michael Tidball.
The society responded through a media spokesman, who defended the state’s lawyers against charges that they were targeting disability insurers.
“Where a (super) member is in need of assistance in making and maintaining their claim it is their legal right to seek legal advice, and if the client instructs, it is their lawyer’s obligation to help enforce their claim,” the spokesman said.
“Lawyers are able to help navigate the complex rules and processes surrounding claims.”
The spokesman suggested there were special circumstances in which it might become necessary for some clients to engage a lawyer.
“In cases of total and permanent disablement, lawyers will often be involved where the member requires urgent treatment, in which case it is entirely appropriate for ‘pressure’ to be applied to obtain a speedy resolution of the claim,” he said.
In response to claims that lawyers were collecting up to 35 per cent of a successful claimant’s payout and charging as much as $3500 for just filling in claim forms, the spokesman said ASFA had not provided more information to support the allegations.
“If there is a circumstance where a legal practitioner has been found guilty of conduct that would give rise to a complaint of unsatisfactory professional conduct, such as overcharging, this should be referred to the Legal Services Commissioner,” the spokesman said.
“We have invited ASFA to provide specific information in relation to such claims, however this has so far not been forthcoming.”
Premiums on the rise
ASFA’s attempt to influence the behaviour of compensation lawyers comes after members of industry funds copped big increases in insurance premiums in the last year.
Two of the country’s biggest funds – Cbus and Australian Super – hiked death and disability premiums by more than 80 per cent in 2014.
Earlier this year two other big funds – MTAA Super and HESTA – announced premium hikes of 110 per cent and 35 per cent respectively.
Superannuation consultants told The New Daily last week that the increased involvement of lawyers in the insurance claims process had been a major driver of recent premium increases.