Federal Court Ruling Against Telstra Super Puts Complaint Handling Standards in Spotlight

Key Takeaways

• Court Finds Breaches: The Federal Court found Telstra Super failed to comply with mandatory internal dispute resolution obligations tied to member complaints.
• Delays Were Significant: About one-third of relevant complaints were not resolved within the required 45-day timeframe, with many responses taking more than 100 days.
• Communication Failures Identified: The Court found some complainants were not properly informed about delays or their right to escalate complaints to AFCA.
• ASIC Scores First Test Case: The proceedings represent ASIC’s first enforcement action under Australia’s strengthened internal dispute resolution regime introduced in 2021.

Deep Dive

A Federal Court ruling against Telstra Super has delivered one of the clearest judicial warnings yet to Australia’s financial services sector that poor complaint handling can carry real regulatory consequences. The decision found that Telstra Super failed to comply with mandatory internal dispute resolution requirements after mishandling a substantial number of member complaints over more than a year.

At the center of the case was the fund’s failure to meet strict timelines introduced under Australia’s updated complaint handling regime, which came into force in October 2021 as part of broader efforts to strengthen consumer protections across financial services.

The Court found that roughly one-third of relevant complaints lodged between October 22, 2021 and January 13, 2023 were not answered within the required 45-day timeframe. In about 30% of those delayed matters, responses took more than 100 days after the complaint had first been received.

For members waiting on answers tied to their retirement savings, the delays were not simply procedural lapses. The Court also found that, in some cases, Telstra Super failed to adequately explain why complaints were taking longer than expected and did not properly inform complainants of their right to take the matter to the Australian Financial Complaints Authority.

The judgment offers one of the strongest court-backed affirmations yet of ASIC’s internal dispute resolution framework, particularly Regulatory Guide 271, which established stricter expectations around timeliness, transparency, and consumer communication.

ASIC Deputy Chair Sarah Court said the scale of the failures left too many members without clarity at a time when they were already dealing with unresolved disputes.

“It was unacceptable that such a high percentage of complaints were mishandled, with many members left in the dark about the reasons behind these delays, further compounding their frustration,” Court said.

“This outcome sends a clear message that compliance with mandatory internal dispute resolution standards is not optional, but a legal obligation.”

The regulator framed the outcome as an important marker for the wider financial services industry, particularly as firms face increasing scrutiny over customer outcomes, operational resilience, and governance practices.

“Financial service providers must invest in robust systems and devote adequate resources to ensure complaints are managed promptly and fairly,” Court said. “This protects consumers from harm and underpins trust in the superannuation system.”

The case, however, was not a complete victory for ASIC.

While the Court agreed Telstra Super breached its dispute resolution obligations, it did not find that the fund failed to provide financial services “efficiently, honestly and fairly,” nor did it conclude that the trustee had inadequately resourced its internal dispute resolution function.

Still, the judgment contained pointed criticism of the way members were kept informed during complaint delays.

Justice Neskovcin emphasized that “timeliness is central to effective complaint management,” reinforcing the idea that complaint handling obligations extend beyond eventually providing an answer. The process itself, including communication during delays, matters.

In assessing Telstra Super’s delay notices, the Court found some explanations provided to complainants were insufficient. Justice Neskovcin specifically noted that statements telling members that “the investigation into the cause of your complaint is ongoing,” or words to that effect, did not adequately explain the reason for delay.

According to the judgment, merely stating that an investigation remained incomplete was “not a ‘reason’ for the delay in providing an IDR response.”

The proceedings mark the first time ASIC has taken court action under the strengthened internal dispute resolution obligations introduced in 2021, making the case particularly significant for superannuation trustees and other financial institutions now operating under heightened expectations around complaint management.

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