Thousands of Aussies to share in $249 million settlement after superannuation class action

Hundreds of thousands of Australians will share in a $249 million class action settlement.

Superannuation fund members alleged their potential retirement savings were whittled away during a series of deliberate investment choices with Commbank, the parent bank for the funds in question.

The settlement, reached without an admission of liability, alleged that Colonial First State Investments Limited (CFSIL), Avanteos Investments Limited (AIL), and their wrap products, did not act in the best interest of their fund members.

“They invested members’ retirement savings with their parent bank CBA without trying to obtain the best interest rates available for their members,” Slater and Gordon Lawyers alleged.

“The cash and deposit investments at the centre of the proceeding did not provide members with the returns they were reasonably entitled to expect, and that in total members lost millions in aggregate retirement funding.”

The funds allegedly received undislosed payments from Commbank, which incentivised them to invest in this way with Commbank.

The class action was one of many launched after the 2018 Banking Royal Commission.

“The inquiry laid bare some of the dodgy practices that have seen ordinary Australians ripped off by unfair conduct in the banking, superannuation and financial services industry,” Slater and Gordon Lawyers said.

The alleged conduct between Commbank and super funds AIL and CFSIL went on between November 2008 and September 2021.

One lead applicant had a cash account with an AIL wrap product for nine of those 12 years.

Another lead applicant, Wendy Gibson, joined Colonial’s FirstChoice Wholesale Personal Super in 2005.

She invested in term deposits offered through the product between 2011 and 2019.

“I was dumbfounded when I first learnt of Colonial’s alleged conduct. We must be prepared to stand up for what’s right against these big conglomerates,” Gibson said.

“I’m glad that we persevered with this case and I’m relieved that it will finally conclude.”

That massive timeframe of alleged misconduct is one reason the payout is so large, Slater and Gordon Lawyers Class Actions Practice Group Leader Nathan Rapoport said.

“The outcome reflects the seriousness of the allegations, the long period of the alleged wrongdoing and the vast sums of members’ savings invested by the CFS trustees with CBA,” he said.

“If trustees do not fight for the best interest rate returns on cash and deposit investments, members can lose tens of thousands of dollars by the time they retire.

“In superannuation, small differences add up.

“A few hundred dollars today, invested for many years in super, can compound into a much larger amount by the time people retire. This settlement will boost many members’ retirement savings so it can grow into the future.”

The settlement is subject to final documentation and approval by the Federal Court of Australia.

If approved, the settlement funds will be distributed according to a court‑approved scheme, which will include details on eligibility, payment calculations and the process for distributions to be made to group members.