The concept of reasonable
What is the meaning of 'reasonable'?
In respect of unclaimed superannuation money, 'reasonable' has its ordinary, common law meaning.
In accordance with common law principles, what is considered 'reasonable' in a particular case involves an element of judgment and depends upon the facts of the case and the environment in which the issue is examined.
It should be kept in mind that a trustee is required to 'exercise, in relation to all matters affecting the entity, the same degree of care, skill and diligence as an ordinary prudent person would exercise in dealing with property of another for whom the person felt morally bound to provide' (paragraph 52(2)(b) of the Superannuation Industry (Supervision) Act 1993).
Super providers are not expected to pursue information or activities at all costs but to base their efforts on what would normally be required in the circumstances, having regard to the environment.
It would be expected that providers prepare or refer to records that could demonstrate the efforts undertaken to comply, including the business processes which are adopted in processing the work, the information on which the efforts were based, the factors taken into account, and the methods of communication used. It is expected that providers will hold and be able to produce on request such records and materials (which may include business procedures, policy documents, etc) as required to demonstrate compliance with the SUMLMA.
What is a reasonable attempt?
A super provider must make a reasonable attempt to obtain the date of birth and the sex of the member. What constitutes a reasonable attempt will depend upon the facts of each case and needs to be weighed with the costs and the responsibilities of the trustees.
If a super provider does nothing to obtain the information, then this would generally not be considered a reasonable attempt.
Usually, it would be considered prudent that if a member, upon making application to the super provider for membership fails to disclose all fundamental information (including name, address, and date of birth), then the super provider would take steps, as soon as practicable, to obtain the missing information. The longer the provider delays in obtaining the relevant information from the member, the greater the likelihood that the information will not be obtained.
Activities that may be considered a reasonable attempt to obtain the information include:
- telephoning the member or the person who established the account using the last known telephone numbers
- writing to the member or the person who established the account asking for the necessary information
- sending the member or the person who established the account an email asking for the necessary information.
What is a 'reasonable effort'?
The discussion about what is reasonable equally applies here. The meaning of 'reasonable effort' was considered by Helman J in Inprint Ltd v Australian Mutual Providence Society, unreported, Supreme Court of Queensland, 24 April 1995 where his Honour said, at 14:
'A lengthy period of inaction, followed by a short spurt of activity would not, in the ordinary course of events I think, be regarded as showing that reasonable efforts have been made. But if there were compelling reasons for the delay, that might be another matter.'
Factors to consider when determining what action and effort is reasonable include:
- the information the super provider has in relation to the member
- the activity patterns on the member's account
- the type of super account, for example, employer-sponsored membership, individual membership
- the type of industry the member is engaged in, for example transient employment, long term with the same employer and fund, working within a particular industry
- the account balance
- the costs of the different methods in attempting to contact the member.
Actions which would demonstrate that reasonable efforts were made to contact a member include:
- the provider posting letters to the member's last recorded postal or home address; telephone calls made by the provider to the member's recorded telephone numbers, emails sent to the member's email address or attempted contact using any details provided by the last known employer or intermediary. However, if the super provider has reason to believe the details were no longer valid (for example, the member has been reported as a lost member for the last ten years and there have been no changes in the members details) then this would not be considered reasonable
- the provider checking their own records to see if the member has other accounts with more current information
- checking the White Pages telephone directory for more current details on the member
- engaging a company like Australia Post to undertake database searches to provide more current details on the member
- contacting a transferring fund if applicable
- contacting the sponsoring employer (particularly where employer contributions are being made on a regular basis)
- contacting any listed intermediaries
- contacting the nominated beneficiaries listed on a binding death nomination.
Example
According to the super provider's records, Jane Doe turned 65 years of age and has an account balance of $1,000,000.
No contributions have been received in the last three years and there has been no contact with the member for the last six years. The provider has sent annual statements to the member's address and none of the mail has been returned unclaimed.
The provider telephones Jane Doe but the call is unanswered. Given the size of the account balance, this action alone would not be considered a reasonable effort. However, if the provider attempted to write to the member, contact the member's employer, search the White Pages for more recent contact details, check whether there are any other accounts for the member with different contact information, then this would be considered a reasonable effort.
Example
A member's super account was transferred from a super provider to an eligible rollover fund (ERF). Information provided at the time of the transfer was limited to the member's name, address, date of birth and benefit details. According to the information held by the ERF the member has now turned 65 years of age but no contributions or contact has been made within the last five years (since the member joined the ERF). The member's account balance is $3,750. The ERF previously had mail returned from the address provided at the time of the transfer. The super provider uses the electronic White Pages to locate another address for the member, however, mail is also returned from this address. Taking into account the factors listed above, this would be considered a reasonable effort by the super provider.
Example
A member rolled the money in his account from Super Provider A to Super Provider B five years ago. Two months after he rolled the money over, Super Provider A distributed money to all account holders and the member's account received $1.25. It would normally have been expected that Super Provider A would have contacted the member soon after the distribution to arrange a transfer out. However in this case, Super Provider A did not do anything. The member has now reached 65 years of age. Usually it would be expected that the fund would attempt to contact the member using last known details. However, given the small balance in question, it would be reasonable to expect that any further action would be limited on the part of the super provider.
What is a 'reasonable period'?
What is considered to be a reasonable period will depend upon the facts of each case. For example, if correspondence is sent overseas in an attempt to locate a person, a longer period of time should be allowed for receipt of a response when compared to correspondence sent within Australia.
For correspondence within Australia, the community standard for an acceptable response time is between 21 and 28 days. Adopting a similar time frame would be considered reasonable. For correspondence sent overseas, as a guide, allowing 56 days for a response would generally be considered appropriate.
If the contact method used is email or a telephone call, then three days for a response would generally be considered acceptable unless the contact was overseas. In the case of overseas telephone calls or emails, allowing seven days for a return phone call or email would generally be considered appropriate. If the request required a written response, then the correspondence time frames referred to above would be considered appropriate.
It would also be considered prudent for a period of time to pass between the estimated time of response and determining that money is unclaimed.
Example
A member of the super fund retired and was entitled to a lump sum payment of $1,000,000 which was also a splittable payment. The super fund attempted to contact a non-member spouse by telephoning them directly. The fund left a message which was not returned within three days.
A week later the fund wrote to the non-member spouse at the address provided on the court documents. The fund allowed 28 days for the non-member spouse to contact the fund.
At the end of 28 days, there was no contact from the non-member spouse. A week later, the fund sent a letter to the solicitor whose details were on the splittable payment documents. The fund then allowed 28 days for the solicitor to respond.
At the end of the 28 days, there had been no response from the solicitor so the fund called the solicitor directly. The fund then allowed the solicitor a week to contact the fund. At the end of the week and with no response from the solicitor, the fund determined that the non-member spouse could not be located.
It is an offence for a super provider not to make reasonable efforts to ensure that a benefit is received by either the non-member spouse or his or her legal personal representative. For more information see Penalty.
In the case of the death of a member, determining what a 'reasonable period' is may require consideration of:
- the period of time since the fund last had contact with the member, especially since the last time that beneficiary details were updated (refer to the paragraph below for the meaning of 'last had contact'
- whether or not a trust estate is involved
- the likelihood of finding entitled persons such as dependants
- whether any potential beneficiaries may be overseas
- whether the super provider has knowledge of recent family circumstances.
Sections within The concept of reasonable
Last Modified: Thursday, 8 March 2012