(Reuters) -Australia’s securities watchdog is suing the country’s largest pension fund for delays in processing claims tied to deceased members, following a similar lawsuit against another superannuation fund for customer service shortcomings.

The Australian Securities and Investments Commission (ASIC) said on Wednesday it had filed Federal Court proceedings against AustralianSuper, alleging it failed to promptly disburse death benefit claims for about 7,000 members over a five-year period.

ASIC highlighted one instance where AustralianSuper took over three years to pay a claim to a deceased member’s relative, while under Australian law, funds are given a 90-day deadline to process claims related to death.

ASIC alleges that potential failures occurred between July 1, 2019 and October 18, 2024.

AustralianSuper, in an email to Reuters, said it was considering the claim and would respond in due course.

"During COVID, a sharp increase in member deaths and a significant impact of the pandemic on staffing numbers saw a backlog relating to the processing of death claims emerge," a spokesperson for the fund said.

The allegations come after ASIC filed a suit against superannuation fund Cbus in November 2024 for a range of customer service failures.

In February, ASIC imposed a fine of A$27 million ($17.00 million) on AustralianSuper for failing to merge duplicate accounts.

"It is the trustee’s responsibility to ensure sufficient resources are available to service members and claimants, and that adequate oversight of systems is maintained to deliver all services as promised to members. Accountability cannot be outsourced," said Sarah Court, ASIC deputy chair, on Wednesday.

The regulator is also claiming that AustralianSuper, which manages over A$355 billion ($223.40 billion) in retirement savings, failed to pay members’ benefits as soon as practicable after the members’ deaths in respect of at least 752 members.

($1 = 1.5891 Australian dollars)