The Australian Securities and Investments Commission (ASIC) has said it engaged with seven superannuation businesses – or nine trustees – between 2017 and 2020 that had been either at the time or historically assigning “smoker” status to members in products unless the member took active steps to opt out.

Those super funds were named as: AMO, Colonial First State, Equity Trustees, IOOF (inc OnePath), Intrust, Netwealth and Suncorp.

Since ASIC raised the issue, all businesses have stopped charging new members life insurance premiums at smoker rates by default.

According to the statement from the regulator, all seven businesses have moved, or are in the process of moving, existing members paying premiums at “smoker” rates onto non-smoker or blended rates.

Four businesses have also refunded, or agreed to refund, members for extra premiums paid.

Commenting on the issue, ASIC commissioner Danielle Press highlighted how “generally, insurance premiums for smokers are substantially higher than for non-smokers”.

“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.”

She added that “insurance in super is complex”, with many Australians not realising that default classifications can impact the price of their cover and therefore reduce their retirement benefits.

“In light of the low smoking rate, merely providing disclosure and putting the onus on members to act is not enough to support good member outcomes.”