Bank-owned super funds to be targeted by class actions

Planned class actions will aim to recoup “exorbitant” bank super fund fees and money lost to uncompetitive cash interest rates.

The Slater and Gordon campaign will target super funds backed by the Big Four banks. Pic: AAP

Law firm Slater and Gordon says bank-owned super funds owe more than $1 billion to Australians being urged to join class actions to recover money “gouged” from their retirement savings.

Launching its “Get Your Super Back” campaign today, Slater and Gordon said the Commonwealth Bank-owned Colonial First State and AMP were likely to be the first targets of planned class actions.

Members of those two institutions combined had lost over half a billion dollars, it said.

Slater and Gordon is targeting fee gouging and the paying of uncompetitive interest rates to retirement savers who have part of their super in cash.

“This means that millions of Australians may be out of pocket and a handful of banks have lined their pockets,” said Slater and Gordon class action head Ben Hardwick.

He said the firm intends to recoup as much lost super as it can.

The firm expects that up to one-third of all adult Australians may be eligible to join the class actions.

“What funds like Colonial First State have been doing is dumping super with a parent bank such as CBA,” Mr Hardwick said.

“The interest from the parent bank is so low that investors in the cash option are receiving rates as low as 1.25 per cent a year. This is even below the RBA cash rate.

“This rate of return is ludicrously low. Standard bank interest should be around 2.0 to 2.5 per cent.

“That’s what most banks offer to ordinary customers with their normal term-deposits. And that’s what industry super fund members and some retail fund members have been getting.

“We don’t believe there is any justification for a bank-owned fund member being worse off than industry fund members, especially when they have chosen to invest in a passive cash investment option, which requires the fund to do basically nothing.”

The move follows evidence at the royal commission of misconduct by the major banks.

Slater and Gordon will now be pressing for retail super fund members to be compensated for the difference between their returns on cash, and the returns they should have received “if the trustee had done their job properly”.

banks had been taking Australian for a ride, said Mr Hardwick.

“It’s been about lining their own pockets: about propping up their profits and undermining the entire scheme.”

Evidence at the banking royal commission has also included revelations of high fees whittling away savings by AMP, and cases where Colonial First State failed to move customers from a high-fee fund to a low-fee fund.

“We’re happy the royal commission has exposed these dodgy practices, but we don’t believe exposure is good enough,” Mr Hardwick said.

“We now think it’s time that Australians got their super back from the big banks.”

The Commonwealth Bank said it was aware Slater and Gordon was investigating potential class actions but it had not been served with any legal proceedings.