The corporate regulator ASIC is taking industry superannuation fund Cbus to court for failing to process more than 10,000 death and disability claims in a timely way.

The Australian Securities and Investments Commission is alleging that payments from more than 6,000 of those claims have been delayed by more than a year.

That equates to more than 50 per cent of Cbus' total claims at that time and it is alleged they are yet to completely rectify these issues.

ASIC says the financial loss to members could top $20 million and has launched legal action in the Federal Court seeking penalties and other compliance orders.

The civil penalty proceedings allege that from September 2022 to November 2024, Cbus failed to act efficiently, honestly and fairly in the handling of claims for death benefits and TPD insurance.

ASIC further claims that despite receiving reports from its third-party administrator, Australian Administration Services Pty Limited, United Super — the trustee of Cbus — failed to properly assess the scale of the impact to members and claimants.

When it did take action in October 2022, the "response was inadequate and insufficient to resolve the issue".

Between November 2022 and February 2023, the issue was brought to the attention of the Cbus Risk Committee, but United Super failed to report the issues to ASIC within 30 days, the corporate regulator alleges.

The matter was ultimately reported to ASIC in August 2023 and September 2023.

But ASIC claims that United Super failed to take all reasonable steps to ensure reports were not materially misleading.

In a statement, Cbus has apologised for the delays and says it has established a compensation program. It also says it has been co-operating with the ASIC investigation and will ask it to engage in alternative dispute resolution to avoid lengthy litigation.

ASIC Deputy Chair Sarah Court said: "Delays in claims processing like those alleged by ASIC cause real harm to families who may be relying on the payments to meet critical expenses.

"This adds to difficult personal circumstances, whether grieving for a loved one or dealing with severe injury or illness. The additional anxiety and pain these delays caused compounded the issues these members and their families faced."

In a statement, Cbus said it was "sorry that delays have been experienced in the processing of insurance claims made by our members. Regrettably this has added to the distress of members and their families".

The statement added: "We apologise to our affected members and their families without reservation and promise to do better. Cbus has implemented a number of measures that are reducing delays and is committed to further improving management of insurance claims.

"Cbus has established a compensation program for affected members which is being implemented now."

ASIC is seeking penalties, declarations, adverse publicity orders and orders for compliance matters to be implemented.

"We allege Cbus failed its members and claimants at their most vulnerable time, and we are taking this case to protect all those vulnerable Australians trying to access the financial support to which they are entitled," Ms Court said.

"The systemic failure by superannuation trustees to deliver essential member services in a timely manner is a key priority for ASIC and we will continue to take action to hold trustees to account."

Last year the ABC reported on delayed Cbus Super payments affecting two widows who found the process harder than it needed to be.

Carolyn Hocking and Lauren Hall both reported issues accessing their late husbands' superannuation funds. 

Ms Hocking eventually received  the payment 15 months after Mr Hocking's death while Ms Hall's claim was fast tracked after she spoke to the ABC. 

Cbus Super apologised for the delays at the time and said it would conduct a review.