Colonial facing new class action

Commonwealth Bank’s Colonial First State has been hit with its second class action in two days.

CBA has acknowledged class-action proceedings have been filed. Picture: Hollie Adams

Commonwealth Bank’s Colonial First State has been hit with its second class action in two days, this time over allegations more than 500,000 super­annuation members were gouged over fees.

Slater and Gordon has filed class-action proceedings in Victoria’s Federal Court alleging Colonial failed to act in the best interests of FirstChoice Super members and acted unconscionably by charging higher fees to pay so-called grandfathered commissions where no ongoing services were required.

The class action stems from revelations at the financial services royal commission that since 2013, Colonial paid advisers or their licensees more than $400 million in commissions funded by higher fees to super members.

Many advisers worked for other parts of CBA, which profited from retaining commissions.

“The Hayne report found there was no justification for continuing to pay commissions to financial advisers,” Slater and Gordon special counsel Nathan Rapoport 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.”

Rival law firm Maurice Blackburn on Thursday filed proceedings in the same court alleging Colonial failed to move $3.2 billion of members’ money into a lower-cost, higher-performing MySuper product in a timely way, acting against the best interest of members and contravening super law.

But even that was not the first class action to come Colonial’s way, after Slater and Gordon filed last year over allegedly uncompetitive super returns.

Maurice Blackburn is also running a shareholder class action against CBA over the share price fall related to Austrac money-laundering allegations against CBA, which resulted in a $700m penalty — the largest civil penalty in Australian corporate history.

CBA on Friday acknowledged class-action proceedings had been filed. “CBA and CFSIL are reviewing the claim and will provide any update as required,” CBA said in a statement.

AAP