In his first big public test since taking the reins at Cbus Super, chief executive Kristian Fok has strategically defended the fund’s much-scrutinised relationship with the construction union CFMEU, arguing that there has been “incredible value” working with the union so far but was tight-lipped on the nature of any future engagement.
Appearing in front of the Senate Economics References Committee on Thursday, Fok dismissed suggestions by the committee chair and Coalition Senator Andrew Bragg that Cbus will keep the CFMEU afloat with payments. The union is now in the hands of administrators.
According to Cbus’ own disclosure, the fund paid a little more than $900,000 in total to the CFMEU and its affiliated national and state branches in the 2024 financial year.
“To be clear, these [payments] are not gifts, they’re not donations,” Fok said.
Most of it was payments related to director remuneration and for partnership programs the fund has with the union, which is an important component of Cbus’ member engagement, Fok said.
“There is a huge benefit and a strong reason for us to reach out to people in the construction industry around the issues that are relevant in terms of our differentiated product,” Fok told the committee.
APRA imposed additional licence conditions on Cbus in August and ordered it to produce an independent governance report, and Fok was non-committal when asked if Cbus will continue payments to CFMEU pending the report’s findings.
“I’m not in a position to say yes or no,” he said.
“What I can say is we do believe there is incredible value with that relationship.”
The administrator of CFMEU nominated three directors – Jason O’Mara, Paddy Crumlin and Lucy Weber – to the board of United Super, the trustee of Cbus, in September. O’Mara had resigned from the Cbus board in August but was renominated. Fok said the director nominations are still being considered.
“I’m not in a position to provide anything further than that until the board has reviewed those nominations,” he said.
When quizzed by Bragg about recent staff departures and if fund chair Wayne Swan was involved in the decisions, Fok said Swan “does not have day-to-day” involvement in the running of the fund.
“All decisions around that are mine,” Fok said.
“The structure changes are mine. They are made to implement the strategy and the direction that that I have identified and the board has agreed with.”
‘We will do better’
Fok was apologetic when addressing the delays in handing members’ insurance claims, which this week prompted ASIC to sue the fund. The regulator is alleging that by 31 December 2022, more than half of all TPD and death benefits claims received by Cbus had taken more than a year to resolve.
On Wednesday, Bragg accused Cbus of potentially undermining the inquiry by not making itself available to the committee “for some months”. However, Fok said yesterday that the fund felt it was “important” to address the committee and answer questions from the community, following the legal action launched by ASIC over claims-handling delays.
Super funds have generally seen a decrease in insurance coverage for members since the introduction of the 2019 legislation that banned funds from automatically providing insurance cover to members under 25 or with account balances of less than $6000.
But Cbus, bucking the trend, actually saw an increase in the number of members covered by insurance due to its application for a Dangerous Occupation Exemption, and a campaign that ran between 2019 and 2021 alerting members to the change.
“I do want to again say to say sorry for the impact that the delays in processing of insurance claims have had on our members and their families,” Fok said.
“We are committed to do better, and we will.
“Whilst we have been far from perfect, our board and our team did take action to help reduce delays, and many of those actions have resulted in marked improvements in service and outcomes.”
Fok blamed Cbus’ external administrator, MUFG Pension & Market Services (formerly Link Group), for causing the bulk of the delay. But he recognised that, as the regulators have indicated recently, funds may outsource services to third-party providers but they are ultimately themselves responsible for the standard of services provided to members.
“We had experience with the administrator, a large amount of turnover and staff, a need to uplift on training,” Fok said.
“There’s been quite a lot of actions that we’ve had to instigate.
“Sometimes those things take longer than anyone would like, and we continue to find ways and seek ways to prevent this happening again.”
Fok said the fund has a compensation program in place to “to restore beneficiaries’ financial position” as a result of the delay.
