Colonial First State super members awarded $56.3m
Colonial First State has settled a class action brought on behalf of approximately 100,000 super fund members who were allegedly rorted on fees.
The class action alleged that CFS deliberately delayed transferring super fund members to the cheaper MySuper products, and left them in accounts with unnecessarily high fees, bearing the cost of commissions to financial planners, and receiving lower investment returns.
MySuper law reforms required CFS to move members to these cheaper options, which also happened to perform better.
Maurice Blackburn brought the action in October 2019 in the Federal Court (Victoria), against Colonial First State Investments Limited, the trustee of the Colonial First State FirstChoice Superannuation Trust.
The lead applicant bringing the claim, Lesley Coatman, was a street sweeper driver who retired with less than $35,000 in superannuation.
CFS settled the class action for $56.3 million, inclusive of legal fees, subject to court approval.
A trial was due to start next week but it has now been vacated.
Maurice Blackburn says the settlement means class action members should start receiving compensation proceeds into their superannuation accounts this year.
However, CFS has not admitted wrongdoing in the case.
"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," says Maurice Blackburn principal lawyer Miranda Nagy.
"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."
This article first appeared on Financial Standard
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