Slater and Gordon has announced it has filed a class action against Colonial First State (CFS) on behalf of 500,000 Australians, joining Maurice Blackburn who did the same earlier today.
In class action related to members of FirstChoice Super fund that alleged that since 2013 CFS failed to act in the best interests of its members and acted unconscionably by charging them higher fees for ongoing commissions to financial advisers who were not required to provide any ongoing services to members.
The announcement said CFS paid advisers or licensees they worked for over $400 million in commissions that were funded by charging higher fees to superannuation members.
Slater and Gordon special counsel, Nathan Rapoport, said ever since the government banned commissions to advisers for new members in 2013 CFS continued to do so with respect to existing members under grandfathering.
“The Hayne Report found there was no justification for continuing to pay commissions to financial advisers. We agree,” he said.
“Paying these commissions – and as a result charging members higher fees – ripped hundreds of millions of dollars out of members’ retirement savings to profit the financial advisers or the licensees they worked for who were not required to provide any services in exchange.
“We allege that Colonial should have stopped paying the commissions for all its members and reduced their fees accordingly, as it properly did for new members… We believe Colonial’s conduct was in breach of the law and it should be held to account and required to compensate its members.”
Rapoport noted CFS had the power to transfer existing FirstChoice Super members into identical products with lower fees and where commissions were not paid.
“Rather than use this power for the benefit of its members, Colonial kept them in the more expensive products, preying on their passivity so it could continue to charge them higher fees to fund the commissions,” he said.
The class action is being funded by litigation funder, Augusta Ventures.