A slew of major superannuation fund trustees have been chastised by the corporate regulator for wrongly classifying them as smokers, yet only some of the offending trustees have remediated members for the extra premiums paid on their insurance.

According to ASIC it engaged with seven superannuation businesses (comprising nine fund trustees) between 2017 and 2020 that had “either at the time or historically” assigned ‘smoker’ status to members’ insurance products unless the member took active steps to opt-out of the categorisation.

The funds that participated in the practice are: AMP, Colonial First State, Equity Trustees, IOOF (including OnePath), Intrust, Netwealth, and Suncorp.

Following the engagement with ASIC, all seven funds have stopped charging new members life insurance premiums at smoker rates by default, the regulator stated. All have moved or are in the process of moving members onto ‘non-smoker’ status in their insurance products.

Only four superannuation businesses, however, have refunded or agreed to refund members for the extra premiums paid, ASIC reported.

The three that have not agreed to remediate members at the date the report came out (August 5) are among the worst transgressors by numbers, according to ASIC’s summary of remediation. They are IOOF, who has the most members affected by a significant margin with 146,350, AMP (3,516) and Suncorp (1,573).

The vast majority of IOOF’s cases (146,000) come from the OnePath MasterFund, which was formally transferred over from ANZ on January 31, 2020. ASIC’s summary notes indicate the fund ceased defaulting members and transferred them off smoker default rates on March 17, 2018, when the fund was still in the hands of ANZ.

“Generally, insurance premiums for smokers are substantially higher than for non-smokers,’ said ASIC Commissioner Danielle Press in a statement. “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.”

“Those trustees that have committed to remediation are heeding the lessons of the Financial Services Royal Commission – that trustees should seek to achieve outcomes for members in line with community standards and expectations,” she added.

ASIC have advised members who believe they have been wrongly classified as smokers to approach the fund in the first instance, or the Australian Financial Complaints Authority for dispute resolution.