There's a fly in my soup! (aka complaints)

One of the hidden costs of PDS management is actually complaint management. How quickly can you get the info you need when a complaint occurs and is that information going to be useful?

Which got me wondering, just what is happening in the world of complaints? The changes in October last year affected the way complaints are handled internally, but what's going on at the AFCA level?

Luckily (or not, depending how your fund performs of course!) both the APRA super stats and AFCA complaints information are public. So for today’s blog, I thought I’d put some analysis together of  how the big super funds are tracking when it comes to complaints.

Firstly, actual complaint numbers. As you’d expect, the biggest funds generally have the largest number of complaints.

But really, that’s not a great comparison. I considered a number of ways to compare funds, but in the end, I think a ratio of ‘complaints per 10k members’ is the cleanest. Using the June 2021 member numbers and July-Dec 21 AFCA complaint stats, I have therefore extrapolated the following:

I’m sorry to say that Mercer gets the dubious honour of being number one on the list, with Unisuper and Sunsuper at the other end. Note that I’ve left SunSuper and QSuper separate as their numbers show a very different story. I’m sure that’s something that the ART management team is already well aware of.

As you can see, there’s a big spread of results from 3.7 down to just 1 complaint per 10k members. These are of course complaints that make it to AFCA, and don’t include complaints that were handled internally.

Now, ratios are one thing, but who is getting better or worse? For this, I’ve just used absolute numbers, comparing the first half of 2019 to the second half of 2021. Obviously there are lots of factors at play here, including the growth of the fund, but since AFCA complaints are a significant cost to a super fund (I’d estimate at least $20k per complaint once you factor in all the internal time plus external lawyers plus lost productivity that could have been put to better use), I suspect most funds would be looking for a reduction in the total number of complaints over time.

And the good news here is that nearly all funds have improved their results, over just a few years. Which is impressive, as AFCA complaints are a bit like car accidents, one outcome but a LOT of potential causes that have to be sorted through and acted upon. No silver bullet here folks.

Finally, let’s consider the total cost of managing AFCA complaints. Using my extremely rough estimate of $20k per complaint, here’s what complaints cost funds in 2019 compared to today. Prepare to be horrified…

Those are some big numbers.

As we all know, super is a complicated and ever changing beast. And the hidden costs can be large, especially when the cost is partially an outcome of number of members.

Feel free to share this with your colleagues. And if you’d like a copy of the raw data, just let me know.

Sources for today's email: APRA Super Stats and AFCA data cube