Aussies huge $56.3m payout after launching super class action

The class action had been launched in response to the handling of member’s superannuation funds and could impact millions of people.

100,000 Aussies will share in a $56.3 million payout after a settlement was reached on a class action that alleged a super fund’s delay in transferring member’s money left them languishing in high fee accounts and receiving lower returns.

Law firm Maurice Blackburn Lawyers launched the class action in October 2019 on behalf of a hundred thousand super fund members with Colonial First State.

A street sweeper driver Lesley Coatman was the lead applicant for the class action, who retired with less than $35,000 in superannuation.

The trial was due to start next week but Colonial settled the class action for $56.3 million, although it did not admit to any wrongdoing, with the compensation expected to land in people’s super funds this year.

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The funds are expected to land in people’s accounts this year. Picture: Getty Images

Miranda Nagy, principal lawyer at Maurice Blackburn, said the case alleged that Colonial failed to transition $3.2 billion of accrued default amounts over to the lower cost, higher-performing MySuper product in a timely way.

Super funds were required to place customers’ retirement savings in a no-frills, low-cost MySuper fund unless directed otherwise

The case also alleged Colonial did not act in the best interests of superannuation fund members, Ms Nagy said, who were also left to bear the cost of commissions to financial planners.

“As the High Court has recognised, superannuation is often the greatest asset Australians

have,” she said.

“It is deferred pay and it is critical to a dignified retirement. Fund members are entitled

to expect that superannuation trustees put their interests first.”

The case also alleged Colonial did not act in the best interests of superannuation fund members. Picture: iStock

This was the very first settlement of a super class action since the Financial Services Royal Commission shone a light on the conduct of super fund trustees, she noted.

“The whole point of the MySuper reforms was to make sure that millions of everyday

Australians who hadn’t made an active decision about their super, were not ‘getting charged

for valet parking when they were taking the train’, as Minister Shorten said at the time,” she added.

“MySuper was introduced to protect the retirement outcomes of Australians by ensuring that

consumers weren’t losing money on unnecessary fees and products, and Colonial had a

legal obligation over and above a basic moral obligation to move default member balances

into MySuper at the time that best met their members’ needs, not their own.”