Slater and Gordon settles Colonial First State super fees class action for $100m

14 July 2023

 

Slater and Gordon settles Colonial First State super fees class action for $100m

 

Slater and Gordon has reached a $100m settlement on behalf of Colonial First State customers who were charged excessive fees as part of arrangements the super trustee had to pay ongoing commissions to financial advisers who were not required to provide continuing services to customers in return.

 

The settlement, which is subject to court approval, relates to Colonial’s payment of commissions to advisers, and the fees charged to members of the Colonial First State FirstChoice Superannuation Trust between 1 July 2013 to 1 June 2020.

 

It was launched by Slater and Gordon as part of the firm’s Get Your Super Back campaign.

 

The class action alleged that Colonial, 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 is 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.

 

The settlement is the highest ever achieved by Slater and Gordon in a group proceeding.

 

Lead applicant Marcel Krieger welcomed the outcome. Mr Krieger joined Colonial’s FirstChoice Personal Super in 2010 during a branch visit to the Commonwealth Bank. He said a bank financial adviser recommended the product, and although the adviser mentioned that a commission would be received for signing him up, “I didn’t realise I would be paying ongoing higher fees to fund ongoing commission payments.  

 

“After that initial meeting, I never sought, nor received, any financial advice in relation to my super,” Mr Krieger said.

 

“Prior to this class action, I didn’t know that from mid-2013 I was paying higher fees than members who joined the same product after that time. I would not have stayed in the higher fee product if I had been told that almost identical but lower fee options were available.”  

Slater and Gordon Class Actions Practice Group Leader Kirsten Morrison said many Australians would be eligible for a share of the settlement, which would be returned to their superannuation accounts.

“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,” Ms Morrison said.

 

Second lead applicant Jason Burton said he joined FirstChoice Employer Super through his employer in 2005. After an initial information session with Colonial, organised through his employer, Mr Burton said he did not receive ongoing financial advice.

  

“I was not made aware that I had the option to switch my super to an equivalent super product with lower fees that did not pay ongoing commission to a financial adviser,” Mr Burton said. 

“These fees continued on my super account until I was automatically transferred in late 2016 under MySuper.”

 

Mr Burton added: “I am pleased to have represented thousands of ordinary working Australians like me who had their super balances impacted by these fees”. 

The class action was funded by litigation funder Augusta Ventures Limited. The settlement was reached with the respondent without admission of liability.

Ms Morrison said it was likely that some members of the class who had financial advisors linked to their accounts would have to register to participate in the settlement and confirm that they did not receive ongoing financial advice under the commission arrangements. But she said no action needed to be taken until further notice.

 

“Settlement funds will not be distributed until the settlement has been approved by the Federal Court, and that process will take some months,” she said.

 

“We will be contacting group members with more information about the settlement and the steps required to register for the distribution.”

 

In the wake of the 2018 Banking Royal Commission, Slater and Gordon launched multiple group proceedings against banks and superannuation trustees for putting profits before customers’ interests as part of the firm’s Get Your Super Back campaign.

 

This is the second settlement reached under the campaign. The firm obtained millions of dollars in compensation for BT Super members in a class action that was settled in late 2022.

 

Slater and Gordon is also pursuing Commonwealth Bank and Colonial First State in a separate group proceeding for breaching the trust of superannuation 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.

 

Further information about this settlement is available at: https://www.slatergordon.com.au/class-actions/current-class-actions/colonial-first-state-class-action-fees  

 

Media Contact 

Andrea Petrie 0428 994 937  

andrea.petrie@slatergordon.com.au 

 

Key Facts:

Slater and Gordon has reached a $100m settlement on behalf of Colonial First State customers who were charged excessive fees as part of arrangements the super trustee had to pay ongoing commissions to financial advisers who were not required to provide continuing services to customers in return.

The settlement applies to Colonial’s FirstChoice superannuation and pension customers who were charged the high fees between 1 July 2013 to 1 June 2020. 

The class action is part of Slater and Gordon’s Get Your Super Back campaign following the Banking Royal Commission in which the law firm launched multiple group proceedings against banks and superannuation trustees for  putting profits before customers’ interests.

No action needs to be taken by group members until further notice.

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