Colonial First State Investments (CFSIL) has reached an in-principle settlement regarding a superannuation class action about grandfathered commission.
This has been brought against CFSIL by Slater & Gordon and is the highest settlement achieved by the law firm in a group proceeding.
The matter related to CFSIL’s payment of commissions to advisers and fees charged to members of the Colonial First State FirstChoice Superannuation Trust, in the period 1 July 2013 to 1 June 2020.
The class action alleged that CFSIL, a subsidiary of the Commonwealth Bank of Australia (CBA), did not act in thousands of customers’ best interests by continuing to charge existing members high fees under the commission arrangements. This was despite legislation being introduced that banned the charging of commissions on new super accounts from 2013 onwards.
It was alleged that Colonial had the power at the time to reduce the fees or transfer existing members to identical products with lower fees and where commissions were not paid, but this did not happen until 2019 and 2020.
Slater & Gordon class actions practice group leader, Kirsten Morrison, said: “This is a great outcome for the many thousands of customers who put their faith in Colonial to look after their financial interests but were disadvantaged by the arrangements in place with financial advisers that were not in customers’ best interests.”
A statement from CFSIL said the matter has now been settled, subject to court approval, following a confidential court-ordered mediation. CFSIL denied the allegations and made no admission of liability or wrongdoing.
CFSIL said that if the settlement is approved by the court, eligible group members will each recover a share of the agreed settlement sum of $100 million after accounting for any deductions.
These could include legal fees charged by the applicants’ lawyers and any commission approved by the court to be paid to the funder of the class action, subject to court approval.
A notification of the settlement is expected to be sent to eligible group members in August 2023.
The case was first brought back in 2019 following the Hayne royal commission as part of Get Your Super Back campaign by Slater & Gordon. Actions were also brought against AMP, BT, and ANZ OnePath.
Slater & Gordon is also pursuing Commonwealth Bank and Colonial First State in a separate group proceeding for allegedly breaching the trust of super fund members by investing members’ retirement savings with its parent bank, even though the bank did not offer the best interest rates. That class action is ongoing.
